Regulators to ease planned securitisation reform

LONDON Thu Dec 19, 2013 3:45am EST

LONDON Dec 19 (Reuters) - Global regulators have eased proposed new rules for securitisation in another bid to help kick start a sector tarnished by the financial crisis.

Central bankers and policymakers see securitisation, or packaging loans into bonds, as a key financing tool for the economy and wean banks off central bank money.

The market has shrunk dramatically since securitised products based on U.S. home loans became toxic in 2007, triggering a chain of events that led to a global financial crisis.

The Basel Committee of banking supervisors from nearly 30 countries published revised draft rules on securitisation on Thursday that included more flexibility.

In the original draft it proposed a minimum risk weighting of 20 percent for securitised products but in its latest paper it now proposes a minimum of 15 percent, meaning banks would have to set aside less capital against the products.

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