PloyingScrobble
My goal vas to cxpofl the busine$ modelfeaturedin our Dutch factoryshowmark ts,levemg room'to otherEuropean
witho ut th e vowels :j:';-l;'T:tz*irT Europe'smortgoge mqrkets ore being shqped by the forcesof globolisotion.Butthe integrotionlhot mustresull is being hompered becouseployers from different countries ond morketsegmenlsdo nottolkto eqchother - let dlone understondeochother. So o;rguesToni lvloss,on Americqn who moved to the Netherlondsfive yeors o9o. After threeyesrs helpingto develop Stoter,one of Europe'sfirst third pqrty mortgogeservicers,she left to found Eurocotolyst,o componywhich oims lo bring thewhole Europeonmortgoge induslrytogetherthrough eventsond other octivities.
lendeBin orbercountries. I quicklydiscovered thatpdsitioningthe coftpanyfo. new opportuniticsreqrired the positioningof third-part) se.vi.ing
with no precedentto follow and no pre conceptionsto olercome, drird partl .dministrationi. Erropesoontook oo a morehip .ole d the digitalbridgeto co.' nst the prinary (origination)and secondary(tundins)narke$. At that timc, the inpendingintrcduction of theeurogaveaddedencouragement to lendes vantiDgto ctussborde$,and "the sas poisedto unresticted third parq, administmtion The last tiDe I had the privilete of initionoi globalisation .s addr€sinBthe structuredfinancemarketin movemeDtof capital .nd the incrcasing public was in Barcelonain 2000.In retro bI glob The truth is thatthe tuturcofEuropean domination of Mtionaleconomies as spect,I hay have .ome across. bit too al fimncialm.rketsand multin.tionalcoF lcndi.glis in thirdpartyadminist.ation, 'l vcry .entr€ of that busine$ model is the strong,but the music savedtheWorld for everydiredion in whi.h th€ Todal by lhe E!ryfim'cs wasBe.tl In r nutshell,nitional structures cant convergence As I chidedthe bankjnginduslry for its keepup wilh the paceof changcin the Tbe prcblemsI encounte.cdwerenl in dimculty in manaBingdat , I exdltedmort finaDcialmirkets.while econonicsare qanple (Basle of tappinginto theinvestment bankingcrowd, gaged.ta as. literil cudencyitelf, becaue glob.lising II is a pefcct ( just p.omote s(uri as.nxious to of its v.lne in cro$ seUingand to MBS this),politicsareloc.lisiDgDasle II isa peF who were (ho promote in tisations I was to third party fst of exampleof this). Is the.ean werecom' I wasattenpting to repositionthe roleof administ.ation our activities nortgage adninistation in Eropean In the context of globrlisition, both pleme.tal'"nortgagelending"and"housinsfindre" Tbe ntinE agencies were.lso helptul: Today,ltu l.king n), dangdisn to a thcl wcrcrackingtheirbrainsto devise.clc' mo.tgagc why? Becauseho{sing rnd mortg.ge qnt rating..iteriafor Eurcpean broad€r audience,within a no.e relevdt tulfilmentare inherentlylocal adivities, markcts and were genuinelyirterested in context.That .ontert is globalisation. If )ou .eally think about n, conftunit) {hile financeis now a Blobalactivity.\4hetr movi.g thingslorward. precedes comDe.ce.So the logicalprcgres' appliedLothe nation.l Europeanmoltgage narkets, $is disconnectis evenmore dra- The Tower of Bobel sion be.e is to try to facilitate a pan Europen mortgagelendingaDd houing nati., fo. nany reasns which we reallydo The realstrugglews in finding the markeK ThisisntjNtbecauselamiDcathenrrlves. financecomflrriry that can acceleratethe ned to stdrttalkingabolt pandevelopment of a true,commercial, But who arc"wc l How did I geLro this p.bleof reading! nrap.the curcnt status pointiADdwhatarcthosereasons? of the Europeanmortgag€l€ndingindustry remindsmeof DukeEllingtonlde$ription The goal is not to ekcelbate the probof jazz "playingscrabblewithout the vowlens of the EuropeanleDdingenvnonnrnt Previously on foni l4oss.,, nor eryect bomogeneityol views o. puF Nca.lyfivc yeatsiBo I a(ived at thesceneof pose.The markets are far too large and a ncwjob in a snallomcein. smallvill.se It wdnt until ny fisr ABSconf$encc in 1997thatI realised iDCanncs unique,and someof its m.rkeK actually irr a snall countrywo.kingwith whallvs, experience tundion quitewell tod.y. at that timc,a smallcompantwith some fiis is actuallythe no.tu everyonespeaks It is very dtrcltro cmmnct Rather,to the dtent that wecrn identify localmomentunranda darnedgoodbnsi in conson.nts. abotrt thngs like trnspmcl when we aren't common gromd, we can acceleratethe ndy issueson which everyoneagrees. STATIR wls the firet true Esidcntial evenusingthe sametflnDl$,&om mrkt to mrkl or evenwithinthesaftendstrysgmnt. sub{ervicerir cortin€DtalEurope Mostoriginatore tradiliondll/tundrheir Why globolisotion? nascent industryseg.entnr 1997,td sq the and s such,seF loansfton retaildcposits I referto the unabridged,ceorge Sorosdei-
StructuredFinanceInternotionol www.SFlnews,NET SeDtember/October2002
Viewpoint
vi.c their podolios inrernlll),.h: no sul priscthat pradices.re widelI Nbjcctnc !nd diveryentboth within dnd a,Dongelch DU over.ll, lendingpracriccsarehishly frrs 'nented.nd l.bour intcnsivc,lock conte'n poriry rjskmanagenrcntand capit.l mrrker eflicieDcies and follorvat thc t.liling edgeof the technologycunc to the poi ofhllinB It isdho hdrd to find thc ma.ke vhen. huSe prrt of the indnsrrl speaksonly ir terins of .sse6 and liabilities,INestoent bank and raringagcncics luve set up€ntire org.nistional sr.ucturesblsed on . balan.c she."ttornula, and altbough numtreB ralk meraphoricalll,I hlve let to comnmicatc
Communily Among tb€ lobbyistsand thde orginis. tions,tbc luopcan SecuritisalioD Forum miShtsaylhaL.ovc.cdbondsare looking nDreandmorclikenrortgage backed secu Thc Europeln MortgageFederdLion, whoscnrcmbcNhipis dominatedby cov eredbond tundere,might sry th MtsS .ppedrro bc snall covered bondsin . pin srripedsuirlivi,rgolTtheco6t of rheUKI Bntboft p.oductsarerbonl how origi natorsft,ndloansandm.nagefie risk. Sorvhydon'ttheycollaborire? Pcccntly thcEMF6kedtheESFto helpdraftitsposi- Toni l oss:caered bond qnd /tBS communities5hould.oUoborcle lion paperonsecuritisation for Daslc.
I lowever,N Aleranderllatchvarov,head oii erndtion.lstrucrured credirrcsearch at Not only shouldthediilogucbc collcc Every tnnc I spelk to ar rnalysl or an Nietrilll-yDch, explained, givcnho'vtheBIS tive frcm the pespecrive of nationalnar inv$toentbanker thq,Nk,"h.ng on a sec, documentis stnKtued,.ovcrcdbondsfall kets, but fromthdrof ind$tt scgmcnr\ too. are)ou talkingaboutthe (edit sid€orbank nrto one c.tegoryrnd sccn.itisation illls Afterall,Slobalisrtion denrands intcgmtnrn, crpiralsidc herei Well, both be.auscits noLalwayssoblad( and irhite. It's th.t b.hncesh.{t thingagain,com withi,r ratnrg .gencies, for cxanrple, plic.tedby too lev rcsources to go.round. thc.c .rc Daturally methodologicaldiffcF Tbespecirlirdconnnissior on scuriti cnces between bow stnrtLtrcd fiDance and sationwiLhintslsis diferentfrom thespe bank lnllysts view ceftin risks,and how cirlisedcontuissionon banksand finance thcy should be guarded againstor provi codpanies,ind thc two lobbyinggroups sioncd io. Sonre say drese differen.cs oifcr lddre$ tbeirespedncrcgulalor. potcntialfor ratings.rbitrage. Consideringthat morc than s0% of
Despire rbcfad rhatmanlEn.opcd$do noLre.l\, wanta singlemarket,dreulrinite q(estionis, how long will then national narkctssuNiveglobalisation? My intcnthcrcis ro provokethoughtby raisingmo.cqucstionsthan I canan$leiOf couse,no singlepenoncan,andihat\ nry
Or maybeirt therigidlyhic.arch icll and bureaudatic strtrctuesthat isolatedep.rt mentsfron ea.hothcr BtrrLhepracticc h.slcxmllyirithheldrhe de\rlopdentof pcfo.najrcereportingtor Euopean rcsidcntill rvlBs,irhkh every invesror rontinclyflagsasa serious is$te. ln theUS,pooledmoftgage perfonni'rce reportsdre rourinely delivercd on tlpewith out . secondftongbt.ln Europe, eventhe mostbenigndaran cx.c$ivelydillldrlt ro
llurope.nALISisNItsS,coopoalion between Soheretrheplan.Itsyr simplc,it: raditheESBwnb its accc$ro riskmnndgemenrcal.lts callcdconnnuDic!tion. If nrvestore rocketsci€ndns,and drcEMF,with its bro.d \rillseekroimposcha.nonisatior on finanmenbershipbasc,longatandiDg tenurein cialproducts per thrcuShnatunlseledion, Bft'selsrnd cx.cllcntlobbyingskills,cotrld h.psNccanachicve dresameeffedthrough providcbodrwith nraximumlev€dgewirh a collc.tivcunderetanding of theEuropean the luopean Comnrission, N well as rbe norrgagcindustryin thecontextofglobali fondition ior a new Europernmorrgage lf EurcpcaD mortgagelendenwereto iullynndc$tandthc mlrketefllcieDcies drd Convergence economics ol ule that the glob.l capital loday,disussionswithir the industry.re tuarketsa.tualll provide,their mortglge frrgnenkd or occurbil.temllywithinspe p.oductsmight takeon morestre.mlired cifi. indusrrysegnrents, wjrho!r alw.ys .haractcristics that could genemtehigher rddrcssing thebigpjctLre. .ctunN lvhenpooleddrd sold ii the sec l drc sametime, D.ny orginisalbns whichdo seethe bjg fi.rue tdQ politic.l At the sanretine, vhy ror introducedl .onrplications astheirnrenrberbas keksto lcastthc ideaoiconceivirgmortgages N. pin'Eu,lpeln !$et d6s, spdnni'rg covere<l A.ollc.tivc approach mightdllolrrhem Loa.hicvcthegoalof servingrhenodrbcF Survivalstrntegies .re not llwrys nst shipwhilccxlendingtheiruniqueperspcc choic$tor anyone, but it helpsto coNjder
$'bcthcrit k ft,llpedonn.nceti8ures on *cnri*cd portfoliosor historjc.lperlo. d.nce on thcir ovcrall book, Duropern lenders fcd tharrhemostnrinutedet.ilwill away somccompctitive advant.Se. 8i!e
wh4 is neededis a larger ftamcwo.k andp.mdign to lind Lheclcncntsolcomnxnrgrourdthrougbotrr rheindnstrv.ndat lhc \cry leaststrnd.rdisethc conccpts and lerhs,if not bestpractices.
Tronsporenayond communicotion To compliciteo.tLets ftr.thc.,Flropeln lendingnNtjtrlionste .h...ctcrisedby d cultureof seffecyboth withiDand outside Mdybethis culruralrcluct.nceto slmre i,riormation is . clasic no .arct, no stkk ' situationth.t couldbe Rsolvcdwith differ
September/Oclober2002
we lll h.ve a loice in shapingthe Ml tlmt globdlis.rion unlolds.A dewdiilogne shouldpreserve lhe cultLralidenritiesof lhropeyetstriveto gile Eurofed colk.rive
SlructuredFinoncelnternotionolwww.SFlnews.NET