EU Expected to Agree to Securitization Plan by Year End, to Boost ABS Market

European Union finance ministers should reach a deal by the end of the year on a plan to revamp the securitization market in Europe, the European commissioner for financial services said on Tuesday.

The European market for asset-backed securities (ABS) is only half the size it was before the global financial crisis in 2008-2009.

The European Commission, the EU executive, in September launched a broad plan to revive capital markets in Europe, with an initial proposal to revamp the market for securities based on pooled loans such as mortgages, a process known as securitization.

“We might have an agreement in the Council [of EU finance ministers] by Christmas,” the EU commissioner in charge of the plan, Jonathan Hill, told reporters ahead of a meeting of EU finance ministers, who will discuss the issue on Tuesday.

In an attempt to increase banks’ lending capacity while keeping risk under control, Hill has proposed lower capital requirements for asset-backed securities that fall within a new category of “simple, transparent and standardized” (STS) debt.

These proposal needs the approval of EU finance ministers and EU lawmakers.

“I hope the European Parliament will also be able to move forward with this proposal quickly,” Hill said.

(Reporting by Francesco Guarascio; editing by Philip Blenkinsop and Mark Potter)

Related:

• EU Insurers’ Capital Charges May be Cut to Boost Loans
• EU Supervisors Face ‘Binding Mediation’ on Simple ABS Disagreements
• EU Seeking to Cut Minimum Risk Weighting on Simple Securitizations
• EU Close to Easing Solvency II Capital Rules to Lure Asset-Backed Debt Buyers
• Europe’s ABS Market Promotion Hinges on Easing Insurers’ Capital Requirements

Topics Europe