Securitisation could be a game-changer for the EU’s post-pandemic recovery - provided the regulatory review gets it right | AFME


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Securitisation could be a game-changer for the EU’s post-pandemic recovery - provided the regulatory review gets it right
22 Jul 2021
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Author Rebecca Hansford <p>Head of Media Relations</p>
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In response to the publication today of the European Commission’s consultation on the Article 46 review of the Securitisation Regulation, Richard Hopkin, Head of Fixed Income at AFME, said: 
 

“Today’s consultation is an important step in the review of the securitisation framework in order to improve the functioning of this vital funding and capital management tool in Europe. For the last 13 years, securitisation placed issuance has struggled to exceed much more than around EUR100 billion a year – much less than in the United States.  The simple, transparent and standardised (STS) securitisation framework – a global “gold standard” - has struggled to attract new issuers and investors due to overly complex compliance requirements and only very limited recognition provided in associated capital and liquidity regulations.” 
 
“Securitisation can do so much more, so this needs to change - particularly in light of the Covid-19 pandemic. Securitisation is uniquely placed to help address some of long-term economic damage caused by the pandemic through its ability to transfer risk while still enabling banks to continue to lend. Furthermore, if well supported, ESG and green securitisation can also make an important contribution to funding the transition to a more sustainable economy. With EUR 603 million of green securitisation issued as at FY 2020, the market has the potential to grow with a well-designed regulatory environment.” 
 

“The review therefore needs to be ambitious and focus on introducing more proportionality and risk-sensitivity in the Securitisation Regulation, as well as in the treatment of securitisation in sectoral regulations governing bank capital and liquidity (CRR), insurance company capital (Solvency 2) and other areas.” 

Contact

Rebecca Hansford

Head of Media Relations