Securitization and Structured Finance Post Credit Crunch: A Best Practice Deal Lifecycle Guide

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Strategy and feasibility

5.1 STRATEGIC CONSIDERATIONS

A company’s strategy and how this translates and has been implemented into its business model should be key drivers in determining and steering the firm’s future. Hence, securitization deals, particularly since they typically involve large amounts of money (usually several hundred million but occasionally going into several billion dollars), should form an integral part of an originator’s strategic considerations.

This chapter covers the following questions that an originator or financial institution that chooses to use securitization may wish to consider in more detail as part of its strategy:

• What are the strategic considerations that need to be taken care of?

• What drives deal structures?

• What are the key signs that would indicate that an institution may securitize its assets?

• What is key to issuing a successful deal?

5.1.1 Overall strategy

Business model

Given that typical securitization structures usually carry a maturity of a minimum of 5 years (shorter maturities are possible but may not be economically viable), a bank or financial institution considering securitizing its assets would need to give careful consideration to how this can fit into the overall business model. Most banks have a short-term (1-to-2-years) and long-term (5+-year) strategy in place and any future securitization transaction should be analyzed for its strategic fit.

Part of such analysis should consider whether the anticipated securitization ...