RESIMAC reacts to ECB securitisation measures

Non-bank lender RESIMAC has reacted to the European Central Bank’s relaxed restrictions on securitisation.

The ECB and Bank of England’s recent comments supporting securitisation should be seen as an important development in the recovery of the European market, RESIMAC chief commercial officer Allan Savins told Mortgage Business.

“Both the ECB and BoE have publically acknowledged that relaxing the restrictions on European banks to use securitisation as a funding tool will enable a greater level of lending to sectors of the economy that have not been able to access credit over the past five or six years,” Mr Savins said.

Last Thursday, the ECB cut its refinancing and deposit rates and introduced a series of cheap loans to eurozone banks.

AMP Capital chief economist Shane Oliver told Mortgage Business non-banks in particular will benefit from cheaper funding.

“In Australia, we still have a situation where 55 or 60 per cent of bank lending is funded through deposits, so there is not much impact there,” Mr Oliver said.

“To fund the remaining part, banks and particularly non-bank lenders will see a bigger impact,” he said.

“They will probably find some way to take advantage of the very low interest rates in Europe.”

Prior to the GFC, RESIMAC raised approximately 60 per cent of its funding in the European securitisation market and still maintains active relationships with UK and European investors who still support its trades.

Last week, the non-bank announced a $750 million dual currency RMBS issue, its fifth offering into the 144A USD market.

“The RMBS we closed last week had investors participating from both UK and continental Europe and we expect the level of demand from the region to only increase,” Mr Savins said, adding that RESIMAC views offshore markets as a key component in its issuance programme that allows diversification and not just a cheaper source of funding.

“We have made a substantial investment in our 144A programme in the US, for example, that allows us to access the deep and mostly reliable USD market,” he said.

“Diversity in our investor base provides our funding programme stability throughout economic and credit cycles and can also benefit funding costs over time.”

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