Santander spearheads drive to rehabilitate securitisations

Tim Wallace
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SANTANDER is set to be the first bank to add a new industry stamp of approval to a securitisation, as the sector hopes to improve the image of financial instruments tarnished in the financial crisis.

Securitisations see portfolios of loans – in Santander’s case, car loans – sliced up and sold to investors.

The failure of supposedly safe securitisations based on US sub-prime mortgages hit the reputation of the instruments so banks now receive less money than they would expect for high quality securitisations.

A new Prime Collateralised Securities (PCS) label has been designed by bodies including the Association for Financial Markets in Europe (AFME) to reassure investors of the quality of the asset, in the hope that demand will jump and banks will no longer lose out.