Euro-area central banks will play a larger role in purchases of securitised debt, which have been dominated to date by four external portfolio managers, the ECB says.
Bloomberg
Frankfurt
Deutsche Bank and State Street Global Advisors will no longer acquire asset-backed securities for the European Central bank under revisions announced yesterday, according to a person familiar with the matter.
Euro-area central banks will play a larger role in purchases of securitised debt, which have been dominated to date by four external portfolio managers, the ECB said in a statement. The National Bank of Belgium will begin acquiring securities from its own country, while the Bank of France will buy assets in more jurisdictions, the central bank said.
The changes represent the biggest overhaul yet of the ECB’s asset-backed debt program, which has drawn criticism from investors and traders disappointed by its reach. Since June, the central bank has attempted to inject new impetus by targeting investor holdings rather than just buying notes from banks.
“It’s good to see the willingness of the ECB to revive the ABS market because the size of its purchases has been a lot less than investors initially expected,” said Patrick Janssen, an ABS money manager at Prudential Plc’s M&G unit in London. “However, I fear that without at least revising the capital requirements for investors, the ECB will be the sole man standing.”
The Frankfurt-based central bank said its adjustments yesterday were in line with the “goal of implementing increased purchases by Eurosystem central banks.” The institution has acquired €12bn ($13.4bn) of asset-backed securities since November, about 10% of the amount of covered bonds bought under a separate program.
State Street and Deutsche Asset & Wealth Management, a unit of Deutsche Bank, were hired last year along with NN Investment Partners — formerly ING Investment Management — and Amundi to buy securitised debt.
A spokesman for the Frankfurt-based central bank confirmed that the contract with Amundi and NN Investment Partners was extended, while declining to comment on State Street and Deutsche Bank.
Amundi will take on responsibility for acquiring Spanish and Portuguese debt, while NN will take charge of purchases in Italy, said the person familiar with the matter, who asked not to be identified because the changes are private.
Nick Bone, a Deutsche Bank spokesman in London, declined to comment on its removal from the ABS program, while officials for Amundi and NN wouldn’t comment on their firms’ involvement.
“State Street Global Advisors has completed its one year contract with the ECB’s Asset-Backed Securities Purchase Program,” said Noreen Shah, a spokeswoman for State Street. “The ECB has recognised our contribution to making the ABSPP a success and we wish them all the best with the program going forward.”
The Bank of France was the first national central bank to buy ABS for the ECB. The bank’s governor Christian Noyer said last year he prefers monetary policy to be implemented by national central banks rather than through external portfolio managers.
The French central bank’s remit has been extended beyond domestic asset-backed bonds to include purchases in Finland and Luxembourg, said the person. Officials from the French central bank wasn’t immediately available to comment on the new role.
A spokesman for the National Bank of Belgium confirmed it will focus on its domestic market.
