European banks will likely reprise their former role as major RMBS buyers if the asset class becomes eligible for Basel liquidity requirements, as proposed in the CRD IV implementation draft put out by European Commission, according to analysts at RBS in their weekly ABS report.

The European Banking Authority is due to a make the final decision on whether RMBS will indeed be included by mid 2013. “Any such ultimate inclusion will significantly deepen the buyer base for such asset-backed bonds as bank liquidity books are re-incentivized to invest in the asset class directly,” the analysts said.

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