The European Investment Bank (EIB) has proved the immense impact that a supranational investment bank can have for helping issuers in the securitization market. tThe UK should emulate it on a national scale.
While the UK already has the British Business Bank (BBB), which aims to increase the supply of finance to small and medium sized businesses, it does not have the scale or a wide enough remit to energise weak areas of the UK securitization market.
The institution needs to be reimagined, or a new one created that can move at pace and at the scale required to help fulfil the government's goal of economic growth.
Some will argue that calls for a UK national investment bank are redundant when the BBB already exists, and in many ways is performing well. It reached a £5bn lending milestone for its structured guarantee programmes on June 3.
The BBB may have have the capacity to allow the government to achieve some its goals, like increasing home ownership and reaching net zero targets through securitization, but it is constrained by its narrow mandate, which focuses solely on SME lending.
This means that the BBB cannot support specialist lenders like, for example, a UK residential solar leasing company that needs to do an ABS transaction to grow.
This is in stark contrast to the EIB which was able to support German solar lender Enpal through giving the class ‘A1’ notes for Golden Ray 1 a European Investment Fund (EIF) guarantee in October 2024.
Although the securitization desk at the BBB has the infrastructure and capacity to improve the market, it is weighed down by a lack of flexibility when it comes to reacting to market changes, as it either has to fit new funding into one of its existing programmes or go through a long approval process which delays lenders’ access to funding.
The BBB primarily focuses on supporting SMEs in the private market, often through warehousing structures, as opposed to giving support in the public market. It does not have the mandate to invest in mezzanine notes for securitizations through its ENABLE Funding Programme.
Although the most recent public UK SME leasing ABS trade from Haydock Finance, Hermitage 2025, performed well across the capital stack with demand coming solely from non-government ABS investors, there may be ABS trades in the future which will require support from the BBB or another UK investment bank with a broader mandate.
EIB provides the model
The EIB has provided an excellent model for how the UK could use a own national investment bank with a wider mandate, through its recent support for Polish auto lender Vehis.
Vehis completed its Z1.357bn (€320m) debut securitization of auto leases, Vehis Auto Leasing 2025, which it was able to do by pre-placing the ‘A1’ notes with the EIB. The EIF provided bilateral guarantees for the class ‘A2’ and ‘B’ notes, which allowed them to be sold to an external investor.
This was significant for the almost inactive Polish ABS market, as the guidance and investment that the EIB provided will help the issuer grow and eventually it will be able to tap the public market without support from the supranational.
The UK securitization market is by no means weak compared to the rest of Europe, as issuance from the country made up €10.4bn of Europe’s €38bn volumes for Q1 2025, according to the Association for Financial Markets in Europe.
But the UK still has a lot that it can learn from Europe.
While it is important for the UK to improve on its funding availability for the SME sector, this is something which is necessary but not sufficient for helping most specialist lenders in the UK get access to funding.
The BBB should continue to carry out the government’s goal of providing support for SMEs, but the securitization desk should be separated into a UK investment bank which has a wider remit and provides funding for lenders outside of SMEs.
The European Investment Bank has demonstrated its immense capabilities for the European securitization market, which the UK must adopt in order to help specialist lenders grow.
And it isn't as if the government does not understand the benefit of development banks as can be seen in its support for a new multilateral lender to fund defence spending.
The UK has a clear route to using a state bank as a means of boosting its economy. It must take the opportunity.