With a host of special guests dominating the Another Fine Mezz podcast in recent weeks, this week's regular episode with host Tom Lemmon and European ABS reporter, George Smith, felt unusual.
As was long-predicted, European securitization markets have been quiet since Donald Trump's second US presidential election victory on November 5. However, a ruling by the UK Court of Appeal on motor finance meant there was plenty to chew over.
The court found unexpectedly in the favour of the consumer and in a way that was much broader in scope than many in the auto ABS market had anticipated. With lenders now on the hook for billions in compensation, it brings into question whether UK auto ABS deals face a wave of claims from car buyers who were mis-sold finance.
An appeal to the Supreme Court is expected but there are now genuine fears that this could lead to even bigger payout than the £38.3bn handed over by UK lenders stemming from the payment protection insurance (PPI) scandal, that ran until 2019.
Meanwhile, George also took a closer look at how UK banks are looking to manage their regulatory capital, particularly their mortgage portfolios, through securitization.
