Securities Lending and Central Banks: an interview with Andrew Geggus

In a recent interview with Central Banking, Andrew Geggus, our Global Head of Agency Lending Trading, talks about Securities Lending in relation to Central Banks.

This 5 minutes interview explores the following questions:

  • The Fed, the ECB and the BoE have dramatically expanded their asset purchase programmes this year in a bid to tackle the Covid-19 crisis. The Bank of Canada, and the Riksbank are also expanding their balance sheets through similar programmes. How has this impacted the securities lending industry?
  • The pandemic has solidified balance sheet management as a key policy tool for central banks in advanced economies, as emerging central banks have developed them for the first time. Do you foresee a growing demand in securities lending from institutions in lower-income countries. If that is the case, how could you better respond to this demand?
  • In 2019, BNP Paribas updated its global trading platform to make it work around the clock on trading days. You were also developing a new office in Hong Kong, able to handle multi-asset portfolios. In what way will you be able to leverage this infrastructure in the environment created by the Covid-19 pandemic?
  • Regarding climate risk and sustainable finance more broadly, BNP Paribas has been working on the alignment of securities lending programmes with ESG criteria. Are you receiving greater demand from central banks in this regard?
  • In September, the ECB announced that in 2021 it will start accepting bonds with coupon structures linked to sustainability criteria, such as green bonds, as collateral for Eurosystem operations. Is collateral screening the way to better adapt ESG in central banks’ lending operations?
  • Despite recent progress, the Central Banking Institute’s data shows that more than two-thirds of central banks do not screen their assets base on ESG criteria. Is the lack of a global benchmark or standard the main factor hampering wider adoption? How can BNP Paribas help central banks overcome this hurdle?