Ex-ABS bankers are starting to look desperate. Year-to-date US ABS issuance is running at just 27% of last year’s, according to JPMorgan, and estimates suggest that 90% of this year’s securitizations in Europe have been retained by issuers or used as collateral at the European Central Bank, rather than sold to clients.
Desperate times call for desperate measures. One headhunter says he knows of a former ABS professional who’s trying his hand at dog walking. Failing this, ABS refugees could always stoop to asset financing.
Asset financing is vanilla. It is not sexy. Asset financiers simply lend against assets, be they invoices, machinery, or unsold stock. They work for corporate banks – some of the biggest players in the UK are Lloyds TSB, Barclays and HBOS.
What asset financing lacks in excitement, it makes up in dynamism. Suprisingly, given the cirumstances, it’s growing. The Financial Times ran an article earlier this month which pointed out that the sector is expanding at a rate of 15% a year as unsecured lending nosedives.
Jeff Longhurst, managing director at Eurofactor, and a former chairman of the Asset Based Finance Association, says asset financing is increasingly popular with large companies who want to borrow large amounts. As the size of deals grows, he says ex-ABS originators might want to take a look.
“Our sales guys need to know an awful lot when they look at a business. They need to have credibility to assess the viability of the operation and to be able to talk to accountants and finance directors in their own language.”
Structured finance headhunter Ted Tracey confirms a degree of overlap: “The skill set is transferable. ABS bankers who are on the street are starting to get desperate.”
Whether they’re that desperate is another question. Longhurst points out that asset financing professionals don’t earn much compared to investment bankers. Another headhunter is less circumspect: “Is ABS so bad that someone from Morgan Stanley would move to Darlington to help Mr Budchester raise 5m for his metal smelting business? I don’t think so.”