Standard Chartered has focused on structured credit and securitized products — can you walk us through the key achievements and challenges that each of you have experienced?
Over the past four years, we have been focusing on scaling our structured credit and securitised products and positioning ourselves as a globally recognised, trusted and credible financial institution offering a full suite of capabilities — from securitised products trading and financing to bespoke structured financing solutions across the credit spectrum for sponsors and credit funds. Today, our track record of consistent origination and seamless execution speaks for itself, strengthening our position in the West (Europe and Americas), which are our focus areas in addition to Asia, Africa and the Midde East where we are well established.
In the structured credit space, Standard Chartered has always had a strong presence in emerging markets (EM) and our broad strategy has been twofold: preserve our leading position in EM and expand meaningfully into the developed markets, particularly in the West.
Increasing competition and changing market conditions meant that we had to remain ahead of the curve in the EM space while leveraging our strong client relationships to gain a foothold in the West.
We are proud that over the last couple of years we have established a strong presence in financing transactions — ranging from vanilla repo and total return swaps against securitized assets to private securitization solutions. This momentum is reaping results, and we are seeing a strong growth trajectory.
Additionally, some of our biggest achievements have been building our footprint in the US, arranging our first European CLO, being one of the most active trading desks in Europe and rapidly ramping up warehouse capabilities in the EU. The main challenge was distinguishing ourselves and gaining market share in highly competitive markets where many players are well established. To shift that dynamic, we made a concerted push into public markets by building our sales and trading capabilities and then used that to increase our presence in other areas of the market.
Standard Chartered has been making significant headway in the US in the last 12-18 months, especially in private securitization and asset-backed lending. What would you attribute this success to and what are your growth ambitions in the US going forward?
Our success and progress reflect two key strengths: the breadth and depth of our global client franchise, which enables us to penetrate globally and to originate high-quality trades, coupled with our ability to deliver seamless execution — from structuring to underwriting and distributing. We are encouraged by this and are focused on delivering and further building on our positive momentum.
For instance, asset-backed lending has been a particular success story. We have an experienced team and have built the right capabilities. These enablers smoothed the internal risk discussions and allowed us to execute several key transactions quickly. We are also seeing an increased risk appetite and the hold sizes per transaction are going up. The ambition is to significantly scale up the activity and deepen our long-term partnership with clients in line with our brand promise, ‘Here for good’.
In private securitization, the US has been a particular focus for us, and we have been deliberate in prioritising the asset classes we would like to zero in on given the sheer size of the market. This includes partnering with US originators that would benefit from our strengths, while also collaborating with other players to help us expand into other asset classes.
As private and structured credit managers become more sophisticated, how do you strike a balance between providing them with innovative financing/structuring solutions and navigating the uncertainties in the market today?
In the current macroeconomic environment, discipline is the new alpha in private and structured credit. While we are open to having constant engagement with our clients and offer solutions to best address their requirements, we maintain our underwriting independence and stand firm on our terms and standards. In addition, we keep our risk committee abreast of live transactions and the latest market developments to deliver better outcomes to both our clients and the bank.
Selecting the right trades is the most important step — when underwriting a new transaction, we are aware that some of these are multi-year transactions and market cycles will certainly test the strength of that selection process. The key risk mitigation is having the right expertise, rigorous underwriting and comprehensive monitoring, which in turn leads to proactive action.
We also recognise that choosing not to pursue a transaction with suboptimal risk-reward is just as important as executing the right trade. Our investment in people and processes reflects this philosophy.
Outside more developed markets like the US and Europe, can you share a few examples of the jurisdictions where you see interesting opportunities?
The Middle East and Asia have always been core to our footprint and it’s in our DNA to be a super-connector bank and to deliver seamless execution across geographies. However, we do see compelling opportunities in many other markets such as Australia, Hong Kong, South Korea, Saudi Arabia and UAE. Each market has its own dynamics, but the momentum in asset-backed financing continues to grow in these regions. Recently, we completed two private securitization trades in the Middle East and are seeing increased interest and opportunities in southeast Asia. In structured credit financing, we remain active in providing single-asset and portfolio financing for private credit and broadly syndicated loans across the globe. As our presence broadens, we want to extend our role to support our clients across the full financing lifecycle.
