Package includes a number of specific initiatives to help increase lending

The Securities Industry and Financial Markets Association (SIFMA) together with the European Securitisation Forum (ESF), welcomed HM Treasury’s announcement of a package of initiatives designed to reinforce the stability of the financial system.

The wide-ranging package includes a number of specific initiatives to help increase lending. These include extension of the Credit Guarantee Scheme, establishment of a guarantee scheme for AAA rated asset backed securities, extension of the maturity date of the Bank of England’s Discount Window Facility, a new Bank of England programme for purchasing high quality assets, a capital and asset protection scheme for banks, and clarification of the UK regulatory approach to capital requirements.

'SIFMA welcomes this comprehensive set of initiatives which decisively addresses a variety of important market concerns and is an important additional step in helping to restore investor confidence. In particular, the new Bank of England asset purchase facility of up to £50 billion will help monetise a wide range of high quality financial assets, and the Asset Protection Scheme, which provides credit protection to participating institutions on certain assets in excess of a specified first loss position, will help allay lingering questions as to possible exposure to exceptional future credit losses on certain portfolios,' said Rick Watson, managing director of SIFMA and ESF. 'We congratulate the UK’s leadership in utilising securitisation as an important part of the overall solution to restoring funding to EU businesses and consumers. We encourage other EU governments to work together with market participants on the development of similar programmes as appropriate.'

'The securitisation guarantee scheme, which draws on the recommendations made by Sir James Crosby in his November report, will significantly expand lenders’ ability to access the securitisation investor market, which at the moment is still largely shut. The expansion of eligible assets to include a range of mortgages, corporate and consumer debt will provide a boost to the entire UK real economy,' said Marco Angheben, director, ESF. 'Given the importance of restoring funding in the near term, the industry looks forward to working with HMT on finalising implementation as soon as possible, including eligible participants, assets, structures and other important details.'