O'Reilly logo

Asset and Liability Management: The Banker’s Guide to Value Creation and Risk Control, Second Edition by Youssef F. Bissada, Jean Dermine

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

The securitization process

Securitization involves the sale of loans to investors. These may be individuals or institutional investors such as pension funds, life insurance companies or other banks.

As a potential investor, your uncle is very worried about the quality of the loan sold by e-Bank. So, to reassure him about the quality of his investment, you explain to him that two additional parties are involved in securitization: a credit risk insurer and a rating agency. The general mechanism of securitization is given in Figure 10.1.

Figure 10.1. How securitization works

The sale of loans to investors is made through a special corporate entity ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required