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BoE throws weight behind securitisation ‘bogeyman’

Julia Rampen
Written By:
Posted:
December 11, 2013
Updated:
December 11, 2013

A Bank of England boss has signalled support for the return of securitisation as a means to boost lending – as long as proper standards are maintained.

The central bank’s head of financial stability Andy Haldane told the Financial Times securitisation has become the “bogeyman” of the financial crisis. However, with proper underwriting and simple products, he argued it could become the “financing vehicle for all seasons”.

He said: “In a world where we are squeezing risk out of the banking system we would want a simple, safe, vibrant set of channels for non-bank financing to emerge and securitisation is one of those.

“We are talking about simple and safe structures, rather than complex and shadowy ones.”

The Bank’s Financial Policy Committee is examining obstacles to the return of securitisation in a safe and constructive way.

Precise Mortgages is due to launch its first securitisation this month in a bid to diversify its funding base.

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Challenger bank Aldermore has also outlined plans for a potential securitisation in 2014. Managing director Charles Haresnape said lenders will increasingly raise funds in this way. “What will happen to lenders’ funding when the Funding for Lending Scheme finishes?” he asked. “I expect it to be replaced by securitisation.”