Westpac securitises $10.6 billion
Westpac Banking Corp announced today the internal securitization of AUD$10.6 billion of residential mortgage-backed loans.
This strategy comes after the Reserve Bank of Australia (RBA) in September broadened its list of allowable assets for use in repurchase agreements in a move to improve the liquidity of financial markets.
Westpac's announcement is evidence that Australian banks have taken the RBA's efforts to invigorate the economy seriously, with widespread speculation of an imminent recession threatening to damage growth in the banking sector.
Residential mortgage-backed securitizing (RMBS) internally is seen as an unusual strategy for Westpac but, considering the impact of the sub-prime lender market chaos in the US on RMBS, could act as insurance in case of crisis.
Source: Reuters
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