The European Central Bank said it will relax some rules on the collateral that banks can offer in exchange for central bank loans.
The ECB has cut the rating thresholds and amended eligibility requirements for some asset-backed securities, the Frankfurt-based central bank said in an e-mailed statement today. Residential mortgage-backed securities and loans to small and medium-sized enterprises rated at least BBB- at Standard & Poor's will now be accepted with a valuation haircut of 26 percent, it said. The previous minimum rating on such securities was A-.
"They've had to acknowledge reality, and they're obviously having to accept lower-quality paper," said David Owen, chief European economist at Jefferies Securities International in London. "It's all part and parcel of the on-going stresses in the system."
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
- Exclusive discounts on ALM and Treasury & Risk events.
- Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
*May exclude premium content
Already have an account? Sign In
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
