The last two years have been challenging for capital markets and the ABS segment is no exception. In turbulent times, the value investors place on efficiency, profound risk management and clear communication has never been higher. It is against this backdrop that Santander Consumer Bank AG (SCB) celebrates a second consecutive win in the ABS Issuer of the Year category.
“ABS issuance is a key strategic instrument to steer both liquidity and capital of the bank. We are delighted to have been recognised once again by GlobalCapital for our performance,” says Andreas Glaser, chief financial officer at SCB. The bank is a relative veteran in the securitization market dating back to 1997, but is still pushing the boundaries with innovative deals.
Since its foundation in 1957, the bank has grown to become the largest non-captive car finance provider in the country through its mobility business, and a market leader in consumer goods financing. SCB also operates a thriving fully-fledged retail banking service as well as a business and corporate banking unit with a focus on SMEs.
ABS issuance is a key strategic instrument to steer both liquidity and capital of the bank. We are delighted to have been recognised once again by GlobalCapital for our performance
The lender stands out for a host of reasons, one of which is its ownership structure. It is wholly owned by Santander Consumer Finance S.A., a leader in consumer finance in Europe, which in turn is wholly owned by Banco Santander S.A., one of the largest financial groups in the world.
With a €55.6bn balance sheet and around 3.9 million customers in 2021, SCB is on an impressive growth trajectory building on its strong financial basis. “SCB posted a remarkable 35.4% increase in profits in 2021. The bank’s non-performing loan ratio fell to 1.5%, while its total capital ratio rose to 17.1%,” says Glaser. Moody’s and S&P Global upgraded the bank to A2 and A respectively. The rating agencies highlighted a range of factors supporting SCB, including sound asset quality, strong profitability and its share of high-margin lending.
“The year was overall a great result for SCB, not only from a profit perspective, and this is a very important factor for the success of our ABS business,” says Tomasz Osipowicz, head of capital markets at SCB. “For us it was another very good year in terms of securitization – among last year’s transactions we brought a second full stack from our SCGC platform.”
The bank’s €1.8bn SG Germany Consumer 2020-1 deal was the first German public consumer loan ABS and recognised as the best ABS deal of 2020 by GlobalCapital. SCB followed it up in 2021 with another stellar securitization. The SC Germany Consumer 2021-1 trade was increased from €1.1bn to an impressive €1.5bn print driven by very strong market demand,” says Osipowicz.
Appetite was obvious across all tranches from the very high level of oversubscription. The mezzanine tranches were between five and seven times covered, allowing for tight pricing despite the huge size. “We would like to think that the demand shows how much investors like our programme, structure and sound risk underwriting,” says Osipowicz. “We are very proud of our investor base and its breadth and depth.”
SCB puts great weight on keeping in constant dialogue with its investors. In a changing market where the needs and concerns of buyers can shift, the bank keeps the market updated through regular communication and reporting. “A lot of work goes on to make sure investors are informed,” says Robert Westermann, head of securitization at SCB. “We’re not just focused on one particular deal execution but always keep in mind long term goals and our commitment to the market.”
In the standout 2021-1 deal, not only did investors benefit from a stable, granular, short-dated portfolio structured in a highly efficient manner, but the deal size offered liquidity unavailable in most other ABS. The fact that SCB can offer transactions with all these attributes is down in large part to the dedication and skill of its cross-functional teams working on the deals.
“One of our key strengths is the strong performance of the securitization team as well as our colleagues across different units,” says Osipowicz. “They are a very professional group with years of experience from across the market. We are extremely dedicated and take great pride in working not only on SCB transactions but also securitizations from our Joint Ventures. It’s a great honor to be recognised by GC once again for our efforts.”