May 28, 2015
Shearman & Sterling partner Bjorn Bjerke (New York-Finance) and counsel Azad Ali (London-Financial Institutions Advisory & Financial Regulatory) co-authored a chapter in The International Comparative Legal Guide to: Securitisation 2015. The guide, published by Global Legal Group, is in its eight edition.
The chapter by Bjerke and Ali, titled “Securitisations in the Shadows of the New Capital Regime,” examines some of the key elements of the securitisation framework under the Basel standards, particularly in the context of securitisation as a viable financing technique to efficiently manage bank balance sheets. According to the authors, “[t]he Basel III framework, including the leverage ratio and net stable funding ratio, pressure banks to shed long-term assets and reduce risk-weighted assets overall ... Traditional securitisations provide a means for both removing assets from the bank’s balance sheet and transforming the credit quality of the retained securitisation exposures.”
Bjerke and Ali also consider a number of important prudential rules and requirements that will potentially impact banks’ ability and willingness to engage in securitisations, the evolution of the securitisation framework and securitisation features that are likely to change with the shifting regulatory landscape.