Securitization: Will NatWest’s deal backfire?

At first glance NatWest’s new securitization deal is the perfect panacea to Europe’s banking ills. Banks have complained long and hard that big-ticket corporate loans do not bring proper returns and are heavy users of capital. Securitizing $5 billion of them – as the British bank plans to do later this month – will free up credit lines and capital as well as generate risk-free income. Martin Owen, the chief executive of the bank’s investment banking arm, NatWest Markets, describes it as a “golden scenario”.