Basel IV: What are the implications and how can securitization platforms overcome obstacles?

Podcasts - 10.08.2020 - 3 min read time


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Today’s focus topic is on Basel IV, where our Chairman Patrick Loepfe discusses the implications of international banking standards reform and how securitization platforms can help overcome obstacles that stem from those changes.


Patrick Loepfe:
Basel IV is the last step of the changes in the international banking standards as agreed in 2016 and 17, and therefore completes the changes, introduced by Basel III. The Basel committee itself, therefore calls what we call Basel IV, the finalized reforms of Basel III.

The effects that Basel IV on financial institution has are manifolds, but for our clients or the area where we can help our clients most, is especially the fundamental review of the trading book, which is around how risks are measured. And in that respect, it becomes evident that the banks need more capital to cover their risks, especially on the interest risk side, and that makes business lending business but also structured products business, a lot more expensive in terms of capital requirements.

The challenges with Basel IV and the fundamental review of the trading book are that the banks, especially the banks need to assess the risks in a different way. They have a lot more buckets they need to consider, which all in all leads to more capital required for those risks. In that respect, especially fixed income books will suffer from more capital requirements.

Smaller players should consider the GENTWO securitization offering, especially because larger players like the tier one banks, the too big to fail banks, they work already on off-balance-sheet securitization solutions to actually bring their risky, fixed income assets away of the balance sheet of the bank, and make them accessible to private investors and institutional investors to give them the opportunity to invest in better yielding investments.

The GENTWO platform helps in these aspects by providing one-stop shop solution to smaller and also midsize financial intermediaries to have off-balance sheet solution for securitizing, any type of assets, especially also that portfolios and allowing professional investors to invest directing those portfolios, and therefore, reduce the bank balance sheet.

We at GENTWO believe you should choose our solution because we follow real purpose-oriented approach. We work with our clients to find the best possible solution for them. Plus in addition, we design for every of our clients, an individual issuance entity that is off-balance sheet into which he can have any type of assets securitized, many products issued by one entity, and all that is bankruptcy remote from the bank's balance sheet.


Securitization Talks is a podcast presented by GENTWO where we discuss everything securitization. Our goal is to inspire asset managers, venture capitalists, and bankers, to realize the value-add of innovative securitization solutions that disrupt the status quo in the current marketplace.

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