BBA RESPONSE TO BANK OF ENGLAND AND ECB DISCUSSION PAPER ON SECURITISATION
Responding to the Bank of England and European Central Bank’s discussion paper on securitisation in the EU, BBA Executive Director Simon Hills said:
“This is a comprehensive assessment of the benefits of securitisation in enabling banks to help finance the economy. It emphasises that European securitisations actually performed well during the financial crisis, with default rates an order of magnitude lower than those in the US. Despite this clear difference in quality, European securitisations were tarred with the same brush as US sub-prime loan backed securitisations that had been originated and structured with insufficient understanding of how the underlying assets would perform in a period of stress.
“Since the crisis, international rules and regulations have been significantly tightened, improving markets for the better in the US but arguably treating stronger European securitisations more harshly than is necessary.
“It is important that the authorities now recognise that there are some significant impediments to the securitisation market such as the impact of the Solvency II capital regime on investor appetite and the lack of availability of swap counterparties of the highest quality. We also agree that thought should be given to try to identify an optimal securitisation structure. If we manage to make progress in these areas it could help to reinvigorate the securitisation market in Europe.”
Responding to the Bank of England‘s discussion paper on Credit Data, BBA Executive Director Irene Graham said:
“Banks fully support transparency and commercial credit data sharing in order to help businesses access finance and trade credit. We also support the government’s forthcoming legislation in this area and will work with the Bank of England on this latest consultation to assess what else would be useful to develop to enable enhanced business credit assessment, and a revitalised securitisation market, mindful of customer confidentiality and privacy rules. We also strongly support the wider sharing of relevant data from public-sector sources, such as HMRC, which would allow lenders to make more comprehensive credit assessments and lending decisions. “