30.04.2004 – 12:08
Board Members of the 13 TSI Banks decide on TSI Securitisation Infrastructure
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Today members of the Managing Boards of the thirteen TSI banks
(Bayerische Landesbank, Citigroup Deutschland, Commerzbank, DekaBank,
Deutsche Bank, Dresdner Bank, DZ Bank, Eurohypo, HSH Nordbank,
Helaba, HVB Group, KfW Bankengruppe and WestLB) signed the founding
documents for True Sale International GmbH at a special ceremony and
decided on the TSI securitisation infrastructure.
In the run-up to signing the contract documents they had been
discussed with all competent supervisory authorities. The cooperation
was very result-oriented and proceeded swiftly. Now all authorities
involved have given the expected positive feed-back. In particular
the Bundeskartellamt, the German Competition Authority, has no
reservations in terms of merger control legislation with regard to
True Sale International GmbH. The formal notarial foundation of the
GmbH will take place next week.
The TSI securitisation infrastructure was developed jointly by KfW
Bankengruppe, cooperative banks, commercial banks and the
Sparkassen-Finanzgruppe. It can be used by all interested banks and
will contribute to substantially increasing the number of
securitisations transacted from Germany. From the viewpoint of
investors a new investment segment will be created. The ABS
securities issued in this German true sale segment are intended to be
standardised and marked by liquid trading.
The securitisation platform will be composed of three charitable
trusts (domiciled in Frankfurt am Main) and special purpose vehicles
(SPV), which will be set up individually for each transaction. The
charitable trusts assume the role of the shareholders of the
securitisation SPVs issuing the ABS securities under such true sale
transactions. This model, which was chosen in analogy with the
structures practiced internationally, enables the establishment of
insolvency-remote German SPVs, which is a central requirement from
the viewpoint of the rating agencies and investors.
The neutral securitisation platform will on principal be available
to all market participants and for the first time allows the
establishment of SPVs exclusively under German law. As a result,
credit institutions will no longer have to make a detour via foreign
SPVs. Under this structure true sale securitisation functions as
- In each true sale transaction the respective originator founds
its own insolvency-remote SPV with a limited task profile which meets
the standard requirements of the rating agencies.
- These SPVs are assigned the legal form of a GmbH (limited
liability company) and are donated to the three trusts, i.e. the
trusts hold equal shares of these companies and thereby help make the
SPV insolvency remote.
- The SPV buys the loan portfolio to be securitised from a bank,
converts it into tradeable securities collateralised by loan
receivables (asset-backed securities, or ABS) and then sells them to
investors on the capital market.
- The securitisation platform created under the charitable trust
model can be used by all portfolio providers, regardless of whether
they participate in the True Sale Initiative.
The trusts pursue the common goal of supporting research on the
financial and capital market for Germany as a financial center. The
Department of Finance of the European Business School International
University in Oestrich-Winkel/Germany has already been selected as
one of the beneficiaries of the charitable trusts.
True Sale International GmbH (TSI GmbH) is a collective
institution and the second most important element of the
securitisation infrastructure that was decided on today.
Above all, TSI GmbH will be a driving force behind the
standardisation of the ABS market in Germany. In this respect TSI
GmbH will in particular determine the quality attributes that ABS
transactions must have in order to be able to use the label "TSI" on
the market. Acquiring the seal of quality requires, among other
things, standardised reporting by the originator. For investors, this
is a key prerequisite that will give them a real-time insight about
the transaction and its performance. Additionally, specifications as
to the minimum issuing amount, the market making and the eligibility
of the ABS securities to be used as collateral for the ECB will lead
to an improvement in the development of liquidity in the secondary
market and therefore also to greater acceptance of the ABS papers.
This then will make it possible to progressively build up a broad
true sale market.
Ultimately, TSI GmbH is also planned to serve as a forum where key
market participants pool their expertise and analyse the overall
conditions for ABS in Germany, comment on them and devise
recommendations for their further development.
TSI GmbH is open to other shareholders. Apart from a company
general meeting it will also have a shareholders' council to assist
with the performance of its tasks. Each of the thirteen founding
shareholders will send one member of its Management Board or of its
management to the council. High-ranking policymakers will also be
approached to join the council, ensuring that the dialogue on market
development will be as broad as possible.
Apart from its management the GmbH will initially employ three
additional employees and have a capital basis of EUR 1,950,000.00.
Its seat will be in Frankfurt am Main.
The securitisation platform is scheduled to be completed in June.
From then on it will be possible to issue securities via the platform
and the German capital market will have a new, important instrument
at its disposal. The "Global Financial Stability Report" recently
published by the IMF also underlines the tremendous importance of the
True Sale Initiative for the capital market in Germany.
ANNEX to the press release on TSI dated April 30, 2004 On April
30, 2004 the Board members of the TSI banks decided as follows:
Managing Directors of True Sale International GmbH Dr. Hartmut
Bechtold and Dr. Dieter Glüder
Designated Foundation Chairmen of the "Charitable Trust Corporate
Finance and Capital Markets in the Financial Center Germany"
Professor Ulrich Hommel Ph. D. and Professor Dr. Lutz Johanning
from the European Business School, International University,
ots Original Text Service: KfW
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