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 […]

The European Banking Authority has just launched a consultation on the guidelines for the STS criteria for on-balance-sheet securitisation. Given the growth of on-balance-sheet (synthetic) securitisations since the inclusion in Q2 2021 of synthetic securitisations to the STS framework this is quite important. We will, in due course, review the paper and publish our views. A public hearing will take place via conference call on 30 May 2023 from 14:30 to 15:30 (CEST). The deadline for this consultation is the 7 July, PCS will, of course, be responding.

This week the European Parliament, European Council and European Commission reached an agreement on a text for the European Union Green Bond Standard. This much anticipated piece of legislation will create a statutory standard for EU green bonds. As those in the securitisation community following these issues know, there was some controversy early on as to how to define "green securitisations" - particularly around whether a green securitisation ought to be a securitisation of green assets or, like other green bonds, a securitisation whose proceeds would be used for EU taxonomy compliant financings. There was also a subsidiary, if connected, […]

One that we suspect passed most of you by is a call for papers by CEBRA, the Central Bank Research Association, to be discussed at their annual meeting in New York this July. As many as 37 topics will be discussed, but we spotted this one, organised by Europe’s Financial Stability Board: 19*. “Effects of Financial Reforms on Securitisation Markets” With a deadline of March 10th 2023 (!) for submission of papers, it is unlikely that CEBRA will be deluged. But the fact that the FSB chose to organise this session is not uninteresting, taking into account all the discussions […]

Busy Week for the EBA - Homogeneity(Final draft) RTS and Green Lending

Last week was a busy week for the EBA when it comes to items of importance to securitisations. First, the EBA published a final draft RTS on homogeneity for synthetic securitisations. In PCS’ view, this is a thoughtful and altogether excellent proposal. First, it leaves unchanged the division for corporate loans between SMEs and larger corporates but without an artificial line being drawn between the two. On the contrary, the EBA makes it clear that the dividing line should lie where it is drawn by the bank’s own underwriting procedures (and therefore as approved by their prudential regulator. as part […]

Today, the Joint-Committee of the ESAs (grouping the EBA, EIOPA and ESMA) has published the long awaited response to the European Commission's Call for Advice on a possible reform of the securitisation capital calibrations under CRR and Solvency II. The response comes in two reports: one for banking and one for insurance. These can be found here and here. As they have just been published, we have yet to read the full conclusions. But the EBA announcement page gives some indication as to the proposals (or lack thereof) contained in the documents. For the CRR, the EBA has proposed to […]

PCS has added its name to a securitisation market stakeholders' letter to European policy makers. In addition to PCS, the letter is co-signed by AFME representing wholesale markets, the European Banking Federation representing the banking sector, Leaseurope representing the leasing sector, Eurofinas representing consumer lenders, IACPM representing credit portfolio managers as well as the DSA, Europlace and TSI respectively representing market participants based in The Netherlands, France and Germany. The letter comes back to themes that those who follow PCS have often seen us write about. The importance of a safe but deep securitisation market for the health and growth […]

PCS responds to the EBA's consultation on the draft "homogeneity" RTS

PCS filed its response to the EBA's consultation on the draft "homogeneity" RTS. Broadly, PCS is very supportive of the EBA's overall approach. We are especially in agreement with the idea of keeping a single definition of "homogeneity" for all types of STS transactions, whether true sale or synthetic. We also agree with the need to clarify the definition of "large corporate". We do, however, depart from the EBA in the best way to do this and have concerns with the proposed solution being the only solution on offer. Our response also draws attention to the vital importance of the […]

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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

EBA publishes consultation paper on Guidelines on the STS criteria for on-balance-sheet (synthetic) securitisation

EU Green Bond Standard getting close

Under the radar

Busy Week for the EBA - Homogeneity(Final draft) RTS and Green Lending

Joint-Committee of the ESAs response to the Commission is published - expected disappointment has materialised

Stakeholders' letter to European policy makers: "Securitisation cannot play its vital role for the European economy without reform"

PCS responds to the EBA's consultation on the draft "homogeneity" RTS