Banks regulator could soften rules on securitised products-FT

Reuters

Sept 29 (Reuters) - The world's banks watchdog could relaxstringent capital rules on securitisation or asset-backedproducts as part of a second look at the instruments blamed fortriggering the global financial crisis, the Financial Timesreported on Sunday.

Stefan Ingves, head of the Basel Committee on BankingSupervision told the FT in an interview that the supervisorybody could soften tough capital rules on the instruments,which include pooled assets such as mortgages or commercialloans that are resold to investors in tranches. ()

"Securitisations need not in any sense be bad," Ingves toldthe FT. "Risk weights are not for ever. We need to review them.We need to look at the appropriateness of various structuresand pass judgment on them. This should happen next year," he wasquoted as saying.

Once a key source of funding for banks, the securitisationmarket has shrunk to a fraction of its previous size.

In the wake of the financial crisis, Basel introduced aquick fix, known as Basel 2.5, that already tripled how muchcapital banks must hold cover holdings of securitised debt.

The securitisation market is in the doldrums following thecrisis but policymakers see it as a key tool to help banks fundthemselves in future and wean themselves off central bankliquidity.

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