Good news for Italian banks

In one of those highly technical yet genuinely impactful regulatory decisions, the EBA issued an opinion backing a decision of CONSOB on collateral for synthetic transactions. Briefly, you cannot have an STS synthetic transaction unless it is either in the form of a credit linked note (CLN) or it is cash collateralised. In Italy, for legal reasons, CLNs do not work. Further, the rules prohibit the cash collateral from being held by the originating bank unless that bank is at least CQS2. Again, in Italy, because of issues relating to rating agencies’ sovereign caps, banks are not CQS2. This meant […]

The only thing arriving seemingly in greater numbers than new public securitisation transactions this March are expressions of support for the market from European policy makers. The same day as the supportive Governing Council of the ECB's statement but maybe less noticed, we saw the publication of the "Statement of the Eurogroup in inclusive format on the future of the Capital Markets Union". The Eurogroup is an informal body created in 1997 in which the ministers from the euro area member states discuss matters relating to their countries' common responsibilities related to the euro. This statement was the result of a […]

More support for securitisation reform from the ECB

Following the speech by Christine Lagarde last November calling for the revitalisation of the European securitisation market as a key priority for the European Union, the European Central Bank has now issued a statement by its Governing Council on advancing the Capital Markets' Union. As in the speech by Ms Lagarde, the statement places the growth of a securitisation market at the center of its recommendations. Together with consolidated European supervision, the harmonisation of insolvency, accounting and securities laws, the improvement of post-trading regimes and the amelioration of the fiscal disadvantage faced by equity investments, securitisation is one of the […]

It is rare for Immanuel Kant's name to be associated with the technical subject of securitisation. Yet this is what happened when Christine Lagarde asked for a "Kantian shift" in respect of the CMU. Taking our cue from such eminent personage, PCS also called on the memory of the great Enlightenment philosopher in an article published in Eurofi's Regulatory Update magazine and entitled, "Securitisation, Europe's categorical imperative".In the article, we set out the reasons securitisation's benefits go well beyond assisting European banks with episodic capital tight spots. Securitisation, by helping at one and the same time both the banking channel […]

With the markets pretty much gone for the festive break, ESMA gave the markets an unexpected Christmas gift: it published today the much-awaited public consultation on the overhaul of Securitisation Regulation's disclosure templates. To be commended, ESMA's consultation showed no lack of ambition, in that it opens potentially wide vistas of change rather than limiting itself to tweaks. ESMA seeks feedback on four possible ways forward, ranked from minimal to most extensive: The deadline for response is the 15 March 2024.

Lagarde calls for a strong securitisation market as an essential component of a historically necessary change to Europe's finance architecture

It is not everyday that a public official calls upon the legacy of the great philosopher Immanuel Kant, but Christine Lagarde did just that today in a short but impactful speech on the historical necessity of the creation of a strong European capital market's union. A more than notable passage in the speech reads: "A genuine CMU would mean building a sufficiently large securitisation market, allowing banks to transfer some risk to investors, release capital and unlock additional lending." Not only is this very high profile support for a strong securitisation market positive, but it should be noted that it […]

Europe’s Financial Stability Board published, on August 30th, an invitation for feedback on the effects of G20 financial regulatory reforms on securitisation . This is a precursor to a report the FSB intends to write on the topic by mid-2024 and on the draft of which they have committed to consult. With a tight deadline for submission of 22nd September, it is not clear what European securitisation stakeholders will be able to provide. The three week deadline leaves no time for the gathering of meaningful data beyond what is already on stakeholders’ shelves or the articulation of complex argumentation additional […]

ESMA publishes an updated securitisation Q&A

It would appear policy makers and regulators are clearing their decks before departing for their summer holidays and the welcoming beach. After the publication on Monday of the retention RTS by the Commission and the publication of the near final draft of the UK securitisation statutory instrument by HMT on Wednesday, it is now the turn of ESMA. The European securities regulator has just published an updated set of securitisation Q&As. Unsurprisingly, in view of their remit, these deal primarily with disclosure and templates. Helpfully, ESMA has highlighted additions and amendments. Market participants can now add this to their beach […]

PCS responds to the EBA consultation on STS synthetic guidelines and the Commission issues final RTS on retention

Two for one on news today. First, PCS filed its response to the EBA's consultation on the draft guidelines for synthetic/on-balance-sheet STS securitisations. As we approach the final implementation of the Basel III rules, the issue of capital management has loomed ever larger for many European banks. The increase in synthetic/on-balance-sheet securitisations reflects this trend. Going forward, the creation of a large and successful STS synthetic securitisation segment is likely to be a key element of the future development of the European banking system. This is why this seemingly exceedingly technical and dry consultation is, in reality, of great importance. […]

Following their consultation last August the EBA has just published the final draft regulatory technical standard (“RTS”) on the capital treatment of synthetic excess spread. Although a seemingly exceedingly dry and technical subject, the impact of this paper on the European banking industry should not be underestimated. In the last few years, synthetic securitisations have become a key capital management tool for an increasing number of European banks. Without such a tool, the risk of the exiguity of bank capital, in the near future, constraining the credit available to European borrowers was substantial. The regulatory treatment of synthetic excess spread […]

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Good news for Italian banks

Eurogroup adds its support for the revitalisation of European securitisation

More support for securitisation reform from the ECB

Securitisation, Europe's categorical imperative

ESMA's Christmas Present: a Consultation on the Disclosure Templates

Lagarde calls for a strong securitisation market as an essential component of a historically necessary change to Europe's finance architecture

An invitation for feedback from the FSB (...no, not that one)

ESMA publishes an updated securitisation Q&A

PCS responds to the EBA consultation on STS synthetic guidelines and the Commission issues final RTS on retention

EBA publishes the RTS on “synthetic excess spread” achieving a sensible and balanced approach