Under the terms of the STS Regulation, the European Banking Authority is required to publish guidelines and recommendations regarding the interpretation of STS criteria.  Although these are not legally binding on the various national competent authorities who have the final say on the meaning of any STS criteria (short of a legal challenge in the courts), they are likely to be followed by most, if not all, national regulators.  Familiarity with these EBA guidelines is therefore essential for anyone seeking to ascertain the STS status of any securitisations.

Following the end of the Brexit transition period on 1st January 2021, the EBA guidelines ceased to have legal value in the United Kingdom.  However, in a joint statement, the Bank of England and the Prudential Regulatory Authority instructed UK institutions broadly to continue compliance with existing European guidelines until explicitly superseded.  Currently, no superseding guidelines have been issued in the United Kingdom by the Financial Conduct Authority.

PCS will, of course and in the absence of contradictory interpretation from any national competent authority explicitly superseding such guideline, be following these guidelines in analysing STS verifications.

A copy of these guidelines can be found here the EBA’s website is: eba.europa.eu.