The securitisation route is also expected to appeal to banks themselves, Scope said. The massive bad-loan sales in recent years began with boom era commercial property and developer loans that have now largely been removed from bank balance sheet. Lenders here now have what the agency called “relatively granular NPL stock” mainly of SME loans and residential mortgages. These are significantly easier to securitise than CRE portfolios, and if the “No Consent, No Sale” bill became law, so called synthetic securitisation remains a viable risk-transfer mechanism. Synthetic securitisation involves banks buying complex financial derivatives to insure against the risk of borrower defaults.

Source: Irish Independent January 17, 2020 18:11 UTC