In a move that securitization pros universally welcomed as further confirmation that securitization in the U.K. has come of age, Barclays Bank recently confirmed that it is to issue a GBP1 billion ($1.08 billion) deal backed by its Barclaycard credit card portfolio.
The deal, to be lead managed by Barclays Capital, will be the first time that a major U.K. high street bank has securitized credit cards and easily the largest credit card-backed deal from any European country.
"It shows that the arguments that deal originators have been advancing for many years often to nothing but blank looks have finally sunk in: securitization offers significant benefits for capital and balance sheet management and gives a useful diversity of funding," said a source close to the deal.
Another securitization pro said that Barclays' decision, viewed together with the announcement from Abbey National that it plans to securitize 10% of its GBP60 billion mortgage book, should be seen against a background of banking consolidation in the U.K. and Europe as a whole. "It is not necessarily that these banks are targets or even predators, but that with the industry facing consolidation there is even greater pressure on all banks to improve their capital management and to improve return on equity. Securitization allows banks to do that. It shouldn't be forgotten either that it also allows them to quickly raise acquisition finance," he said.