Featured Product

    European Council Confirms Targeted Amendments to Capital Market Rules

    December 17, 2020

    On behalf of the European Council, EU ambassadors endorsed targeted amendments to the EU capital market rules provisionally agreed with the European Parliament last week to support economic recovery from the COVID-19 crisis. The legislative changes include amendments to the Markets in Financial Instruments Directive (MiFID) II, the Prospectus Regulation, and the securitization framework. To facilitate securitization, the existing EU framework for simple, transparent and standardized (STS) securitizations will be extended to cover synthetic securitizations, which enable banks to transfer the credit risk of a set of loans, typically large corporate loans or small and medium-size enterprise (SME) loans, to investors.

    The agreed changes will free up bank capital for further lending and allow a broader range of investors to fund economic recovery from the COVID-19 crisis. To encourage use of the STS label, preferential risk-weights are being introduced for senior tranches retained by the originator, though EBA will closely monitor the market for such products to ensure that this does not lead to excessive leveraging of banks. The new rules also remove regulatory obstacles to the securitization of nonperforming exposures. This is done by broadly aligning nonperforming exposure rules with international standards and ensuring their prudential soundness, while allowing originating banks to use risk-sensitive modeling practices. This will help banks to better manage their balance sheets when dealing with the economic fallout from the COVID-19 pandemic, to secure their lending capacity in the medium term and to share risks more broadly with the non-bank financial sector. The European Parliament and Council will now be called on to formally adopt the amendments without further discussion, possibly in February 2021, after the usual legal-linguistic revision of the text.

    In a separate announcement, European Council reached an agreement on a general approach on the proposal for a European climate law, including a new EU greenhouse gas emissions reduction target of at least 55% by 2030 compared to 1990, following the guidance of the European Council given in December 2020. The main aim of the European climate law is to set into legislation the objective of a climate-neutral EU by 2050. In addition, the Council also approved conclusions entitled "Making the Recovery Circular and Green" in response to the EC "Circular Economy Action Plan" for a cleaner and more competitive Europe. The conclusions aim to provide comprehensive political guidance on a broad range of actions foreseen in the Action Plan. The conclusions highlight the role of the circular economy in the recovery from COVID-19 and make a link to digitalization, underlining the importance of digitalization in achieving full potential of the circular economy. The Action Plan is a key element of the European Green Deal and is closely linked to the European Industrial Strategy. The European Parliament and Council also agreed to an amendment of the Transparency Directive, allowing member states to delay by one year the application of the European Single Electronic Format (ESEF) requirements for listed companies' annual financial reports, provided that they notify EC of their intention to do so. Listed companies that wish to publish their ESEF annual financial reports in 2021 will still be able to proceed. The amendments will apply 20 days after publication in the Official Journal of the European Union. 

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, COVID-19, CRR, Basel, Securitization, Securitization Regulation, STS Securitization, Capital Markets Union, Credit Risk, Climate Change Risk, ESG, ESEF, EC, European Council

    Featured Experts
    Related Articles
    News

    BIS Paper Studies Impact of Fintech Lending on Small Businesses in US

    The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.

    September 26, 2022 WebPage Regulatory News
    News

    UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks

    The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).

    September 26, 2022 WebPage Regulatory News
    News

    EBA Launches EU-Wide Transparency Exercise in 2022

    The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.

    September 23, 2022 WebPage Regulatory News
    News

    SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks

    The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."

    September 22, 2022 WebPage Regulatory News
    News

    EC Rule Lists Advanced Economies for Market Risk Capital Calculations

    The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.

    September 21, 2022 WebPage Regulatory News
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News
    News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8521