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    EBA Updates Address Securitization Standards and DGS Guidelines

    February 21, 2023

    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. The Joint Committee of the European Supervisory Authorities (ESAs) also updated the questions and answers (Q&A) under the Securitization Regulation (2017/2402), with updates covering topics such as the existence of different classes of investors, the application of the homogeneity criteria to branches, the project finance loan receivables, and the securitization exposures backed by several collaterals. Additionally, EBA published the final revised guidelines on methods for calculating contributions to deposit guarantee schemes (DGSs), along with the Q&A on own funds and eligible liabilities. The Q&A on own funds aim to ensure consistency with the revised final regulatory standards on own funds and eligible liabilities and have been published as part of the SIngle Rulebook Q&A.

    Out of these, a key update involves the regulatory technical standards, under the Securitization Regulation (2017/2402), to define the homogeneity of the underlying exposures in STS securitization. EBA has extended the existing work on the regulatory technical standards on homogeneity for both asset-backed commercial paper (ABCP) and non-ABCP securitization to ensure consistency for on-balance-sheet securitization to the overall STS framework. Therefore, these draft regulatory standards amend the Delegated Regulation 2019/1851 by extending the scope to on-balance-sheet securitizations considering the specificities of these securitizations. The existing provisions set out in the 2019 Delegated Regulation are maintained, although with minor modifications to ensure consistency with the new mandate for on-balance-sheet securitizations and to provide further clarity on specific requirements.

    These regulatory technical standards clarify that, for on-balance-sheet securitizations also, the homogeneous exposures need to be underwritten according to similar underwriting standards and serviced according to similar servicing procedures. In addition, they need to fall within the same asset category specified therein and be further assessed with reference to at least one of the homogeneity factors, such as type of obligor, ranking of security rights, jurisdiction, or type of immovable property. Finally, to ensure a continuation of the existing securitization transactions, transitional provisions have been introduced for those securitizations that have been notified as STS and whose securities were issued before its application date. This ensures that existing transactions will continue to remain STS compliant. These final draft regulatory technical standards will be submitted to the European Commission for endorsement. Following the submission, these standards will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.


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    Keywords: Europe, EU, Securitization Regulation, STS Securitization, Q&A, Regulatory Technical Standards, Banking, Basel, Regulatory Capital, Deposit Guarantee Scheme, DGS, EBA

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