| Nearly seventeen months after the introduction of the Funding for
Lending Scheme (FLS) by the UK Government, the program allowing
banks and building societies to borrow from the Bank of England
is slow to have an impact and market results have been mixed. |
| FLS has been a catalyst for record low mortgage rates directly
impacting individual homeowners, while also providing opportunity
for small and medium sized UK businesses. FLS has also had an
effect on the issuance levels of RMBS and UK covered bonds.
Although the link is difficult to accurately pinpoint, the Bank of
England has expressly mentioned the FLS when explaining the
significant drop in issuance levels in these markets. |
| Chart 1.0 below highlights the significant fall in issuance
since January 2012. |
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| Wider European analysis suggests further amendments to the draft
of new regulation is expected on new CRDIV proposals, EMIR, the
Solvency II Directive and the proposed financial transaction tax.
Not all will have a negative impact on new issuance levels. Indeed
many should be positive, but the uncertainty surrounding the
final forms will certainly be a challenge for the market into 2014. |
| U.S. Bank Global Corporate Trust services continues to support
the RMBS and covered bond market and is providing the full range of trustee and
agency services on several deals that closed in 2013 including
Virgil Mortgage No.1, ALBA 2013-1 and Rochester Financing
No.1. “We continue to monitor the RMBS market and the impact of the FLS closely;
we expect a modest pick up next year due to continued portfolio sales and further
securitisation by banks in search of capital relief” said Emma Hamley, VP European
Business Development. |
| Interested in learning more about U.S. Bank Global Corporate Trust
Services? Visit us online at usbank.com/coporatetrust. |
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