ECB Appoints Four Executing Asset Managers for the ABS Purchase Program

According to an announcement made by the European Central Bank (ECB), it has chosen the asset managers who will have the responsibility to conduct the Asset Backed Securities Purchase Program (ABSPP) which was officially announced by the ECB’s President, Mario Draghi, on the 4th of September.

The companies have been contracted by the ECB as executing asset managers and the decisions about what securities to buy will still be handled only by the central bank. Purchases of bonds are expected to start throughout November, after the legal act is officially published.

There are four companies which have been selected as executing asset managers - French Amundi and Amundi Intermédiation, German Deutsche Asset & Wealth Management International, Dutch ING Investment Management and the investment management division of State Street, State Street Global Advisors.

The appointment follows a competitive negotiated tender procedure.

The elected parties will conduct the eligible ABS purchase transactions pending due diligence from the central bank before the transactions are approved. The purchases under the ABSPP are expected to begin next month after the ECB’s Governing Council approves the legal act on the implementation of the ABS program.

The ABS program has been designed by the ECB in order to boost credit provision across the European economy following recent months of stagnation and the threat of a triple dip recession highlighted by recent macroeconomic data across the Euro Area. The size of the program is expected to contribute to an ECB balance sheet expansion totaling about $1.26 trillion (€1 trillion).

The ECB has been arguing for awhile for the development of the ABS maket as a crisis fighting tool designed to channel loans to non-financial corporations. Alongside the Bank of England, both central banks argued for a more beneficial regulatory treatment of ABSs.