LONDON, July 3 Global banking and market
regulators will study whether they should intervene to revive
securitisation, a market that bundles loans to raise funds and
was tarnished in the financial crisis.
Securitised debt based on poor quality U.S. mortgages became
untradable in 2007, unleashing a chain of events that led to the
global markets meltdown, with taxpayers having to rescue banks
that had chunks of the debt on their books.
Since then, the market has failed to recover in Europe in
particular, a region which depends heavily on banks for funding
the economy at a time when they are focusing more on boosting
their capital buffers than granting loans.
"This review of securitisation markets is intended to
understand and identify potential impediments to the development
of sustainable markets," the Basel Committee on Banking
Supervision and International Organisation of Securities
Commissions said in a statement on Thursday.
The European Central Bank and Bank of England are already
trying to kickstart top quality securitisation and encourage
investors to return though banks say it's time to take
Bankers point to two hurdles: high capital charges set by
the Basel Committee on banks that create securitised debt; and
high capital charges set by an EU law on insurers who would
normally buy it.
ECB officials have said that if Basel won't reduce the
charges, Europe should go it alone and cut them itself.
Basel and IOSCO set a July 25 deadline for industry to
complete a survey for their study, which will be aided by the
International Association of Insurance Supervisors, and the
International Accounting Standards Board.
(Reporting by Huw Jones; Editing by Mark Heinrich)