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

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News
    News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News
    News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News
    News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News
    News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News
    News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News
    News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News
    News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News
    News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News
    News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793