ECB'S ABS and covered bond purchase programmes: special focus
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Mario Draghi hopes that his ABS and covered bond private sector purchase programmes will be the fillip to economic growth in Europe that has so far eluded him. Read Euromoney's in-depth coverage of the background to the issues, what the plans are and why they are unlikely to work.
ECB commences covered bonds amid intrigue October 2014 The ECB commenced its covered bonds purchasing programme last week, but no sooner had it started than rumours surfaced about a new plan to purchase corporate bonds. The fevered speculation demonstrates the lack of confidence in the ECB's existing plan, reviving questions about full-scale QE and its seniority in bond holdings.
ECB jumps gun with ABS purchase programme September 2014 The European Central Bank’s announcement on Thursday that it would start a private sector purchase programme of both ABS and covered bonds was both widely anticipated and yet still quite shocking.
September 2014 Market players are hoping Draghi can overcome liquidity and scale challenges in his much-trumpeted ABS purchase plan – seen by some as QE by another name – but if he fails the central bank will have no option but to resort to QE, say analysts.
The biggest difference between QE and this ABS programme is that the ABS market is finite whereas the government bond market is basically unlimited
Draghi wows but market remains fixated on QE September 2014 Analysts are divided over the outlook for the euro and the likely potency of the ECB latest monetary-easing measures, after Thursday’s meeting that saw the central bank cutting rates and announcing the October launch of an ABS purchasing programme. While the measures will buoy credit at the front-end, the jury is out on full-scale QE in the coming months.
December 2013 Europe’s leaders are desperate to kick-start lending to the small and medium-sized businesses that are crucial to the continent’s economic recovery and see asset-backed securities as the key. But the entire sector is constrained by post-financial crisis rules. In an era that will be remembered for the unintended consequences of bank regulation, will the need for SME finance finally unleash Europe’s securitization markets?
The SME funding challenge December 2013 Convinced that reviving the moribund securitization market is the best way to channel funding to small and medium size enterprises, the ECB is now championing the financial technique at the centre of the systemic collapse five years ago. Convinced any U-turn is justified to support the small companies that might drive Europe's economic recovery, the ECB now finds itself at war with regulators still determined to clamp down hard on securitization.
Without new regulation, the ECB plan to buy ABS risks becoming another funding tool, without capital relief Alberto Gallo
SME finance: Weak loan demand is the real problem, say banks December 2013 In November, the European Central Bank published the findings of its latest survey of SMEs in the euro area. It contacted over 8,000 firms, the vast majority with fewer than 250 employees, and concluded with the headline that the dominant concerns for these companies was finding customers and access to finance.
August 2013 In an exclusive interview, Benoît Coeuré, member of the executive board of the European Central Bank, discusses the challenges that Europe faces in stimulating financing to small and medium-sized enterprises, including the creation of a truly pan-European and cross-border capital market in the region and how securitization can be used to re-establish funding to these firms.