The European Central Bank is discussing plans to ease certain
collateral rules for Spanish banks as well as a medium-term plan to
make its own assessment of sovereign bonds instead of using
established rating firms for that job, Reuters reported Thursday,
citing unnamed euro-zone central bank sources.
The possible decision to ditch rating firms, which would reduce the
influence of Moody's Investor Service Inc., Standard & Poor's Corp.
and Fitch, may come as part of a wider coordination of central banks
on the matter, including the Bank of England and the U.S. Federal
Reserve, the sources said.
"We are not there yet operationally but this [coordination between
major central banks] may well be the medium-term solution," a source
said, the news agency reported.
With rating firms downgrading sovereign bonds, the pool of collateral
banks may put up against ECB loans has been shrinking. Spanish banks
are at present one of the biggest users of ECB funds, while the
country's government plans to recapitalize its banks with up to 100
billion euros ($126.61 billion) in aid to be requested from the
European Union.
A decision by the ECB to not rely on existing rating firms for credit
ratings in the future "could also expand the shrinking pool of
collateral which banks in troubled countries have available," one
source said on condition of anonymity.
The decision on more immediate changes to help Spanish banks, such as
expanding the range of debt-backed securities or government-backed
bonds that can be offered as collateral against loans from the ECB,
remains wide open, another central banker said.
Even if it decides to no longer rely on rating firm assessments, the
ECB may continue to apply a sliding scale of charges, or "haircuts,"
to different countries' bonds based on the creditworthiness of the
given country, a source said.
Write to Margit Feher at margit.feher@dowjones.com
(END) Dow Jones Newswires
June 21, 2012 10:05 ET (14:05 GMT)
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