Schattenbanken im Fokus der Regulatoren

The mysteriously-named shadow banking system has garnered plenty of attention in the financial press in recent years, and now it seems the regulators are turning their attention towards the industry. Definitions of this sprawling sector vary, with most describing the multitude of money market funds, hedge funds and peer to peer lending platforms operating at the margins of the traditional banking sector. In short these entities provide funding to corporates where banks cannot, and the global shadow banking system is estimated to total $60 trillion in size.

In the wake of the financial crisis banks have seen regulatory pressure increase dramatically, finding themselves facing tougher capital requirements and under pressure to reduce assets. In the US, non-bank institutions have long played an active role in funding. In the European market, however, banks have typically accounted for around 80% of lending, so the retrenchment of banks from this market has left a significant funding gap. Compounding the issue is the expiration of a large number of collateralised loan obligations (CLO’s), vehicles that pool together corporate and other loans. Around €75bn of CLOs are expected to expire by 2015, with only a fraction of that being replaced by new issuance.

As a result of these factors the shadow banking sector has grown in prominence, providing valuable liquidity to corporates unable to secure funding through more traditional means. This less regulated lending has caught the attention of the European Union (EU), who recently proposed plans to tighten up the rules on shadow agencies. However, any regulation will have to be carefully planned and thought through — while there is a need for more transparency and control, regulators must be careful not to hinder crucial funding sources for the small and medium-sized enterprises (SME’s) so vital to the overall health of the economy.

These views may differ from those of Henderson fund managers. The information should not be construed as investment advice. Before entering into an investment agreement please consult a professional investment adviser.