Page 42 - EBA 2015.1815 Annual report 2014 web 2

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E U R O P E A N B A N K I N G A U T H O R I T Y
40
Work on securitisation and covered
bonds
Contributing to a simple, standard and
transparent securitisation market across
the EU
During 2014, the EBA significantly contributed
to global and EU policy-making in the area
of securitisation, with the publication of an
opinion, a discussion paper and guidelines on
securitisation. The focus of these regulatory
developments has been to foster a well-func-
tioning and prudent securitisation market.
The development of a sound and prudent
securitisation market constitutes a building
block for the Capital Markets Union (CMU) and
will promote further integration of EU finan-
cial markets, help diversify funding sources to
banks and unlock capital; making it easier for
banks to lend to households and businesses
and enhance risk-sharing.
In its discussion paper, the EBA acknowledged
that a one-size-fits-all regulatory approach
to securitisation was no longer appropriate.
Through industry and public consultation, the
EBA invited stakeholders to provide input and
views.
The guidelines on significant risk transfer for
securitisation transactions provide a trans-
parent framework, both to national super-
visory authorities and institutions, ensuring
a more consistent approach across the EU.
These guidelines are particularly relevant in
the context of the deleveraging and de-risking
processes in which EU banks are currently en-
gaged in.
Following a comprehensive analysis, the EBA
published an opinion on the appropriateness
of the risk retention, due diligence and disclo-
sure requirements and its multiple compo-
nents, namely, the type of retainer (originator,
original lender or sponsor), the forms of re-
tention used, the level of net economic interest
retained, and the assessment of the consoli-
dated situation of the retainer. It recommend-
ed some additional safeguards and provisions
to support the current framework and to en-
sure industry participants do not abuse the
rules currently in place.
Report on EU covered bond frameworks
The success of covered bonds as funding in-
struments is closely linked with the develop-
ment of specific national legal frameworks
mostly anchored to the simple references
established in the Undertakings for the col-
lective investment in transferable securities
(UCITS) Directive as a European basis. In July
2014, the EBA published a detailed report on
the European covered bonds frameworks,
identifying a series of best practices ensuring
a robust and consistent regulatory framework
for covered bonds.
The report also provided a positive opinion on
the preferential capital treatment of covered
bonds, but called for further clarifications on
current disclosure requirements and provided
advice on the preferential treatment of some
specific cover assets.
Ongoing activity
In 2015, the EBA will provide technical advice to the
Commission on the creation of a sound and safe secu-
ritisation product. The discussion paper published in
October 2014 already provides the EBA’s preliminary
views based on three pillars of simplicity, standardisation
and transparency. These, together with criteria on the
credit quality of the securitised assets, should shape a
new class of securitisation products that are prudentially
sound and receive specific regulatory recognition.
In particular, the advice will focus on defining the criteria
to identify simple, standard and transparent securitisa-
tions and on appropriate capital requirements for these
types of securitisations. The final technical advice to the
Commission is expected to be delivered in June 2015.
Furthermore, in 2015 the EBA will begin reviewing
Member States’ implementation of the guidelines on
significant risk transfer published in July 2014. This will
enable the EBA to assess and compare how competent
authorities have implemented these guidelines and to
provide advice to the Commission by 31 December 2017
on whether a binding technical standard (BTS) in this
area is required.