ECB: Will launch asset purchase programme in November

 The European Central Bank said on Thursday it will begin its purchases of asset-backed securities or ABS in November as part of a multi-pronged attack to kick-start credit in the euro area.
In addition to a range of other measures, the ECB has drawn up an Asset-Backed Securities Purchase Programme (ABSPP) as "one of a number of measures ... to facilitate the provision of credit to the euro area economy."
And purchases under the ABSPP "are expected to start in November 2014," the bank said in a statement on Thursday.
It did not reveal any more details about the timing or volume of the purchases.
Asset-backed securities (ABS) are bundles of individual loans such as mortgages, auto credit and credit-card debt which are sold on to investors, allowing banks to share the risk of default and freeing up funds to offer more lending.
The ECB believes that the market for such securities -- an important source of financing for banks to keep lending to small and medium-sized enterprises -- has effectively dried up since the financial crisis.
And the bank hopes that by buying them on a large scale, it can help revive the market and free up some of the credit channels which have seized up during the long years of crisis.
In addition to the ABS programme, the ECB has also starting buying covered bonds, which are similar instruments to ABS, but safer, because the underlying assets are ring-fenced or protected on the bank's balance sheet.
There has also been speculation that the ECB could embark on the purchase of corporate bonds. And a large-scale sovereign bond purchase scheme known as quantitative easing is also believed to be under consideration.
In addition, the ECB is making cheap liquidity available to banks on condition they lend it on to companies via a scheme known as TLTRO or targetted long-term refinancing operations.
The ECB is scheduled to hold its next policy meeting next week, after which more details of the ABS programme might be made public.
The central bank said it has appointed four executing asset managers to carry out the ABS programme.
The appointed companies are Amundi and Amundi Intermediation; Deutsche Asset & Wealth Management International; ING Investment Management; and State Street Global Advisors.
The executing asset managers' role will be to conduct the eligible ABS purchase transactions on explicit instructions from, and on behalf of, the ECB, which will undertake price checks and due diligence prior to approving the transactions, it said.