business focus 21
Chartered accountants Haines Watts presents a series of articles based on its blogs. It offers analysis, reviews and comments and welcomes your feedback at
www.hwca.com/blog
of the month
Are ABSs a new source of finance for SMEs? writes Simon Garrett, partner at Haines Watts
The Bank of England and the European Central Bank have recently produced a joint consultation on Asset-Backed Securities (ABSs).
An ABS is a bundle of debt (eg like a bond), which is sold on to other investors and payout is based on the performance of assets linked to this debt – this can be mortgages, credit card loans, or even car loans.
Following the global financial problems regulators overreacted about ABSs whilst tightening up on banks and investors (ABSs in the US were at the heart of the western world crisis) but are now trying to row back.
The thinking is that ABSs could potentially fill some of the shortage of lending by banks to SMEs.
SMEs currently provide around 70% of jobs in the UK and Europe but suffer from higher loan rates than their larger firm counterparts and lack alternative sources of finance. It’s the SMEs which suffer the most if banks are weak and need help.
So why the sudden interest in ABSs? The reality is:
1 The UK Government has failed to make the market for SME loans more competitive and the banking system is still not fully fixed.
2 The European Central Bank, reluctant to use quantitative easing as a result of political pressure from Germany, recognises that it needs to take some action and is trying to kick-start the ABS market as an alternative source of finance.
But are ABSs really the solution? Well not in the short term.
1 The market is far too small and isn’t growing fast enough.
2 The central banks are risk-averse and are only likely to buy the very best ABSs.
3 The central banks need help from regulators and governments to make it happen.
4. ABSs are a useful smokescreen for the eurozone to avoid doing badly-needed quantitative easing.
Sadly this is an admirable long- term project which is being made to look current – it is unlikely to make any noticeable difference for four years plus.
Details:
www.hwca.com
Listen Understand Advise Insure
Distinctly different... your business, your insurance. A leading community broker, with a national reach, we provide insurance advice for:
Corporate businesses Smaller businesses Specialist & niche sectors Individuals
Guildford 01483 539922 Oxford 01993 885470 Reading 0118 9839800
www.jelfgroup.com
Jelf Insurance Brokers Ltd (Reg No. 0837227) is part of Jelf Group plc (Reg No. 2975376) and is authorised and regulated by the Financial Conduct Authority (FCA). Registered address: Hillside Court, Bowling Hill, Chipping Sodbury, Bristol BS37 6JX (Registered in England and Wales). Not all products and services offered are regulated by the FCA.
THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2014
www.businessmag.co.uk
JIB216.07.14
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60