Securitisation reform

The reform of the EU securitisation regulations has reached an important milestone: representatives from the member states have agreed on a joint position on the European Commission’s draft proposal.

According to the German Banking Industry Committee (GBIC) and the German Securitisation Association True Sale International (TSI), the European Council has corrected some of the main weaknesses from the Commission’s proposal, reduced legal uncertainties, and lowered barriers to efficient use of securitisation. However, GBIC and TSI do not believe that this progress is enough to achieve the EU’s stated political goal, which is a sustainable revival of the securitisation market.

Heiner Herkenhoff, CEO of the Association of German Banks, this year’s coordinator of the German Banking Industry Committee, said on the subject: “The adopted measures are an important starting point for a competitive securitisation market within Europe. However, the capital requirements must be adjusted further to ensure that securitisation can once again truly contribute to financing the economy.”

Of course, equal treatment of all market participants remains a central concern for both GBIC and TSI. Any amendments must ensure that the improvements offer equal benefits to both issuers and investors. “A deeper, more liquid securitisation market needs reliable and balanced framework conditions in order to strengthen both confidence in and acceptance of the market,” according to Jan-Peter Hülbert, Managing Director of True Sale International GmbH.

The current agreement represents an important milestone. As the European Council has not yet made changes to the capital requirements, it is now up to the European Parliament to deliver the needed improvements. However, it is unlikely that we will see any results in this respect before May 2026. The goal must be to create appropriate regulations for the European securitisation market, with capital requirements that match the actual risks of securitisation and those capital market instruments with similar risk profiles. Only by doing so can we utilise the full potential for growth and stabil-ity represented by these instruments.