Another article in the Financial Times addressing the ECB's desire to see securitisation return

In an article today entitled "Draghi seeks to revive reviled loan bundles to boost credit", the Financial Times speaks of the desire expressed by President Draghi to see a return of high quality securitisation. The article may be found here (although it lies behind a pay wall).

Draghi calls for regulation to distinguish between good and bad securitisation to revive the market

In his contribution to the panel on the "Global Economic Outlook" in Davos on Friday 25th January, Mario Draghi spoke about possible actions of the ECB. He strongly hinted that the ECB could buy securitisations but noted that the market, at present, was basically "dead". However, he also stated that if regulations could distinguish between good and bad securitisations, the market may return. This indicates an ever increasing held view, amongst European policy makers, that the key to a return on the securitisation market lies, of necessity, in the bifurcation in regulatory frameworks between high quality securitisations and others. This […]

ECB discusses the reactivation of the European ABS market in its most recent monthly report

In its September Monthly Report, the ECB published an article entitled "Reactivating the European ABS market: challenges and possible remedies". (It can be found in Box 6 on page 48 of this document). In the article, the ECB raises the question of the impact of the various regulatory proposals and the issues of investor uncertainty. It also speaks positively of "initiatives to improve transparency and standardisation, with the aim of enabling investors to better assess risk, and support the real economy [as] crucial to attract market participants and reactivate the European ABS market."

ECB confirms that it will no longer accept as repo collateral RMBS and SME ABS that do not comply with the loan by loan disclosure requirements.

Yesterday the ECB announced that, as of October 16th 2013, RMBS and ABS of SME loans that do not comply with the loan by loan disclosure requirements as managed by the European Data Warehouse will no longer be eligible as repo collateral. The ECB did indicate, however, that it would be prepared to make exceptions on a case by case basis if an adequate explanation of non-compliance was provided. Other types of securitisations are not excluded as they do not, as of yet, have loan by loan disclosure requirements. Those are expected in due course and it is anticipated that […]

ECB announces a reduction of the haircuts for certain ABS in its collateral rules

Today, July 18th, the ECB has announced some changes to the haircuts imposed on various instruments used as repo collateral. In particular, it has reduced the rating requirements for six classes of asset-backed securities and reduced haircuts generally applicable to eligible ABS under the Eurosystem collateral framework. This move appears to reflect the views expressed at the highest levels of the ECB that many securitisations performed extremely well and that one should treat high quality securitisations differently from the flawed products that caused damage during the crisis. The ECB press release may be found here.

Mario Draghi, in his presentation to the European Parliament, explicitly supports the return of the securitisation market through making a distinction between high quality securitisation and others

Mario Draghi, in his role as president of the European Systemic Risk Board, made a presentation to the European Parliament's Economic and Monetary Affairs Committee. During the question and answer session, President Draghi responded to a question from Zalba Bidegain, a Spanish MEP from the EPP, on the ECB's role in financing SMEs. He responded that the EIB, the European Commission and ECB were working to “resurrect what it used to be called securitisation” – and said that “we think there are good securitisations and bad securitisations, i.e. good and bad products” – asking for the EP support for such […]

Mario Draghi announces the start of a consultation on "initiatives to promote a functioning market for asset-backed securities collateralised by loans to non-financial corporations"

In a press conference held on May 2nd in Bratislava, Mario Draghi, President of the ECB, announced a consultation with other European institutions on "initiatives to promote a functioning market for asset-backed securities collateralised by loans to non-financial corporations". (The text of the press conference can be found here. In his more detailed response to questions, Mr Draghi also distinguished clearly between "very different kinds of ABS" making positive references to what he described as "plain vanilla" ABS and indicating that this form of ABS was very safe. He also identified regulation as one of the reasons for the very subdued […]

Yves Mersch, of the ECB, gives an interview to Il Sole. He specifically focuses on the issue of upcoming regulations of ABS as a reason for the failure of the market to return

In an interview given last week to the Italian newspaper Il Sole 24 Ore, Yves Mersch, a member of the Executive Board of the European Central Bank and the person in charge at the ECB of the Banking Union dossier, not only reflects of the need for a securitisation market to assist SME's in Europe but specifically refers to the proposed regulatory changes to the capital treatment as a possible cause of the securitisation market's failure to revive. The relevant extract of his interview can be found here

Benoît Coeuré , Member of the Executive Board of the ECB makes a positive reference to securitisation and to PCS

Benoît Coeuré, Member of the Executive Board of the ECB, gave a speech in Dublin on April 11th on "Challenges and feasibility of diversifying the financing of EU corporates and SMEs". Securitisation is touched upon as a possible source of funding for SMEs in Europe, indicating further support from policy makers for a return of a strong and high quality securitisation market. In particular, Mr Coeuré, cites PCS, commending its efforts in this field. The speech can be found here

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