New UK Government Measures To Support The UK Banking Sector: Key Points For Asset-Backed Securities (ABS)

This article was originally published 20th January,

2009

On 19 January, 2009, the UK Government announced the details of

a second support package for the UK banking sector in attempt to

address current barriers to lending in the wholesale and consumer

markets. The key measure in respect of securitisation is the

guarantee scheme for ABS ("ABS Scheme"),

which implements some of the recommendations of the Crosby Report

published in November 2008.

ABS Scheme

In its announcement, the UK Government has published only

limited information in respect of the ABS Scheme; although further

details are to be announced by the Debt Management Office in due

course.The main features of the ABS Scheme are as follows.

The ABS Scheme will commence in April 2009, subject to state

aid approval.

The Government will, in consultation with issuers and

investors, provide full or partial guarantees to eligible AAA-rated

asset-backed securities, including mortgages and corporate and

consumer debt, in an attempt to improve banks' access to

wholesale funding markets and stimulate the flow of credit to

consumers and corporations.

UK banks and building societies eligible to participate in the

UK's current Credit Guarantee Scheme (which includes approved

UK subsidiaries of foreign institutions) will be able to access the

ABS Scheme, subject to fulfilling the ABS Scheme conditions.

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