Featured Product

    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.

     

    Related Links

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

    Featured Experts
    Related Articles
    News

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News
    News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News
    News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News
    News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News
    News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News
    News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News
    News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News
    News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News
    News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News
    News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8952