RBS returns to mortgage-backed securities market

14th Sep 2010 15:21

'Mortgage backed securities' is a term that conjures up unpleasant memories of the recent banking crisis so shareholders in Royal Bank of Scotland (RBS) may regard the news that the state-owned bank is dipping its toe back into the business of moving back into the asset-backed market.The bank is launching its first sale of mortgage-backed securities since the credit crunch, with the issue of a £4.7bn bond backed by residential mortgages.RBS will embark on a road show on Wednesday as it tries to find investors to sign up for the issue. Although mortgage-backed securities (MBS) got a bad reputation following the collapse of the market in 2007, much of the blame was attributed to the practice of parcelling up risky sub-prime loans with safer mortgages. The new bond will consist of new prime residential mortgages from RBS and NatWest Homeloans and, if successful, will raise fresh funds that will then be available for RBS to lend to businesses.