European Central Bank and Bank of England liquidity schemes require that loan-level data be disclosed on a regular basis (no less than quarterly) with respect to asset-backed securities which are to be used as collateral.  On 27 November the ECB announced that it would postpone the introduction of mandatory loan-level data reporting requirements to 3 January 2013 for RMBS, 3 January 2013 for ABS backed by SME loans and 1 March 2013 for CMBS.  Both the Bank of England and the ECB provide templates for disclosure of loan-level data on their websites.

The ECB describes the rationale for its loan-level data initiative as being to help “both investors and third-party assessment providers with their due diligence” and states that “Ultimately, more transparency will help to restore confidence in the securitisation market”.  It is clear that the intention is to set a standard not just for the central bank liquidity scheme but also for the ABS market in general.
Continue Reading Loan-level data – implications

I was encouraged to see Virgin Money announce its second securitisation of the year, Gosforth 2012-2, particularly so as Virgin Money is also one of the 30 or so banks that have now signed up to the Bank of England’s Funding for Lending Scheme.

The Funding for Lending Scheme (FLS) was introduced by the Bank of England back in July to reduce funding costs for banks and building societies to stimulate lending to UK households and small businesses. Under the scheme, between August 2012 and January 2014 any participating bank or building society can borrow UK Treasury Bills for a 4-year period in exchange for providing eligible collateral as security. Broadly speaking, the eligible collateral will include certain loans, securities and other assets also eligible under the Bank of England’s Discount Window Facility. The costs to participating banks and building societies for this lending depends on how much lending they do into the real economy but can be as low as 0.25% per year. If this results in banks lending more to the real economy at better rates and borrowers have the appetite to take on such debt sufficiently to make a noticeable impact, then that’s great …. mostly.
Continue Reading Securitisation: a nationalised pastime?