The European Central Bank hired BlackRock Inc. (BLK), the world’s biggest money manager, to advise on developing a program to buy asset-backed securities.
BlackRock Solutions, a unit of the New York-based company, will provide advice on the design and implementation of a potential ABS-purchase plan, an ECB spokesman said in response to e-mailed questions. Safeguards against any conflict of interest are included in the agreement, the spokesman said. The value of the contract wasn’t given.
ECB President Mario Draghi said in June that the central bank is intensifying preparations to purchase ABS as it strives to revive the faltering euro-area economy. The measure could help revitalize a $1.9 trillion market that has contracted 34 percent since 2009, and may ultimately be a part of a large-scale program of quantitative easing.
“Hiring an adviser who knows the ABS market and has experience investing in it before, during and after the crisis is clearly positive,” said Dipesh Mehta, a director of securitization research at Barclays Plc in London. “However, the appointment in itself is simply another step on the path toward QE. It is the format of QE that is key, with many questions to be answered on what bonds to buy and how to do it without jeopardizing the existing investor base.”
BlackRock was one of four co-managers of a Federal Reserve program during the height of the credit crisis in 2008 to buy residential mortgage-backed securities in the U.S. The Fed also called on the company to analyze the assets of Fannie Mae and Freddie Mac after the government took an 80 percent stake in the two mortgage giants.