To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013). One of these is the Regulation 2021/557, which amends the Securitization Regulation that provides a general framework for securitization of instruments and creates a specific framework for simple, transparent, and standardized (STS) securitizations. The other one is the Regulation 2021/558, which amends CRR with respect to certain adjustments (in Regulation 2021/557) to the securitization framework. Both the newly published regulations shall enter into force on the third day after their publication in the Official Journal of the European Union.
The key amendments to CRR relate to the treatment of non-performing exposure securitizations, senior positions in STS on-balance sheet securitizations, grandfathering of senior securitization positions, and Collective Investment Undertakings with an underlying portfolio of euro area sovereign bonds. Additionally, the key amendments to the Securitization Regulation relate to the following:
- STS on-balance-sheet securitizations, including the transitional provisions for this
- Requirements on simplicity, standardization, and transparency
- Requirements for the credit protection agreement, the third-party verification agent, and the synthetic excess spread
- Macro-prudential oversight of the securitization market
- Development of a sustainable securitization framework
Effective Date: April 09, 2021
Keywords: Europe, EU, Banking, COVID-19, CRR, Basel, Securitization, Securitization Regulation, STS Securitization, Credit Risk, NPLs, European Parliament, European Council
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.