DTCC and Clearstream have announced they will establish a strategic partnership to support the syndicated loan and the bilateral loan markets in Europe. Clearstream, the international central securities depository based in Luxembourg, will leverage DTCC’s Loan/SERV Reconciliation Service and begin to offer the service in the first half of 2012. The companies also will develop bilateral loan services, building on DTCC’s existing Loan/SERV platform and integrated with Clearstream’s collateral management platform.
DTCC’s Loan/SERV Reconciliation Service automates the reconciliation process and enables agent banks and lenders to view and reconcile syndicated loans on a daily basis. Under the strategic partnership, DTCC and Clearstream will distribute the Loan/SERV Reconciliation Service to existing and prospective clients across Europe, the Middle East, Africa and Asia.
DTCC and Clearstream also will enhance the Loan/SERV Reconciliation Service to support the processing of European bilateral loans in early 2012. Bilateral loans involve one lender and one borrower, as opposed to syndicated loans, which involve one borrower and many lenders.
In addition, the partnership will focus on integrating Loan/SERV’s upcoming bilateral loan module with Clearstream’s collateral management platform. This will enable Clearstream clients to leverage their bilateral loan portfolios as collateral with their respective national central banks. It will also extend the potential types of assets to be used as collateral in interbank triparty transactions, as per the longstanding recommendation of the International Capital Markets Association European Repo Council (ERC), an advisory industry body that fosters best practices for the financial services industry and the international repo market.
"We are pleased to partner with Clearstream on this initiative," said Michael Bodson, DTCC COO. "The strategic partnership will benefit the customers of both DTCC and Clearstream by bringing together highly complementary strengths and services in loans and collateral management respectively, as well as help expand existing loan services in Europe and elsewhere."
Jeffrey Tessler, CEO of Clearstream, said, "We are pleased to cover a new asset class with our services and create a new market infrastructure for loans. We are looking forward to partnering with DTCC and to being able to draw on DTCC’s experience in the syndicated loan market. Our goal is to improve the existing syndicated loan service for bilateral loans and enhance it with our collateral management capabilities."
Loan/SERV Reconciliation Service is a service offering of DTCC Loan/SERV LLC, a subsidiary of DTCC.@