TAXPAYER-BACKED Royal Bank of Scotland is returning to mortgage-backed funding markets for the first time since the financial crisis.
The part-nationalised player is launching a £4.7bn bond backed by residential mortgages in a sign that funding markets are finally putting the credit crunch behind them.
It is hoped the move will boost lending for British borrowers as securitisation – which involves bundling individual loans into new bonds backed by loan repayments – offer a vital source of funding for banks.
The market for mortgage-backed loans shut down during the crisis, after the “toxic” sub-prime loan disaster in the US left them with a terrible reputation.
But demand has begun to return in recent months.
RBS began wooing investors for its bond today with a roadshow that runs until the end of the week.
Its bond is backed by a pool of new prime residential mortgages from RBS and NatWest Homeloans.