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. 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
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BOG Launches Regulatory Sandbox in GhanaRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
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).
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.
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.
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.
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.