Banks may gain from securitized debt sector
Print Edition
BANKS in China may gain from the growth of China’s asset-backed securities market which expects to draw more non-banking investors to trade securitization products, Fitch Ratings said in a report yesterday.
Liquidity in the banking system may also get a boost with their entry as the regulator introduces greater operational flexibility and encourages expansion and opening-up of the market, the rating agency added.
Securitization refers to the practice of pooling debts like mortgage, auto loan, credit card debt and corporate loan to a third party as securities.
The People’s Bank of China’s latest data showed there were 300 billion yuan (US$48.3 billion) in outstanding securitization products in China at the end of April, and Fitch believes there is scope to grow this year.
In April, the PBOC said it would no longer require regulatory approval to issue securitization products, and on May 13, the State Council approved an extra quota of 500 billion yuan for the trial program.
China launched the securitization business in 2005 but stopped it during the 2008 financial crisis.
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