Fitch welcomes FSA call for more ratings to get capital relief

20 Jun 2011

Fitch has come out in support of the FSA’s proposals to overhaul the supervisory formula approach. Under the regulator’s new guidance, banks will no longer be able to use their own models to determine whether a risk transfer securitisation has achieved significant risk transfer — and therefore whether the bank can claim capital relief.

FSA guidance suggests that in future, banks will have to get the retained piece of the portfolio rated by an external agency to prove significant risk transfer, which market participants say could effectively close the market.

“The FSA's proposal is not a surprise," said Ian Linnell, group ...

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