EU consumer credit law threatens ABS
European securitisation faces a fresh threat from EU regulators, who may force consumer finance lenders to notify borrowers if they transfer their loans or credit card accounts to a special purpose vehicle to back an asset backed security.
Banks and finance companies are usually reluctant to securitise assets if they have to notify the borrowers, because of the cost involved and the risk of upsetting customers.
The structured finance market has been buffeted for the last five years by regulatory initiatives, including Basel
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