The Depository Trust & Clearing Corporation (DTCC) and Clearstream today announced they would establish a strategic partnership to support the bilateral loan (also known as credit claims) and syndicated loan markets.
Clearstream will leverage DTCC's Loan/SERV Reconciliation Service and begin to offer it in the first half of 2012. They will also develop bilateral loan services, which will be built 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.
In addition to supporting syndicated loans, DTCC and Clearstream will enhance the Loan/SERV Reconciliation Service to support the processing of European bilateral loans in early 2012. Bilateral loans are loans involving one lender and one borrower, as opposed to syndicated loans which involve one borrower and many lenders.
The partnership also will focus on integrating Loan/SERV's upcoming bilateral loan module with Clearstream's collateral management platform. This will enable Clearstream clients to facilitate the mobilization of their bilateral loan portfolios as collateral with their respective national central banks and will extend the potential types of assets to be used as collateral in interbank triparty transactions, according to the long-standing recommendation of the ICMA European Repo Council (ERC).
Michael C. Bodson, chief operating officer, DTCC, said: "We are pleased to partner with Clearstream on this initiative. 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, chief executive officer, 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 be able to draw on DTCC's experience of 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.