RMBS returns as competitive funding source for UK banks

Nationwide Building Society
By Owen Sanderson
30 Jan 2020

Nationwide priced a three year UK RMBS this week at 47bp, just 10bp back of a recent three year covered bond from Lloyds. It’s the closest the two products have been in years, and potentially a tight enough spread for UK clearing banks to once again bridge the gap and revive securitization as a major source of funding.

Covered bonds have dominated secured funding for the major UK banks in recent years, as the absolute prices on offer have blown away those available in securitization. But that may be changing.

“In relative value terms, RMBS — particularly in sterling — is typically always more cost efficient compared ...

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