Regulation (EU) 2021/558 amending Regulation (EU) No 575/2013 as regards adjustments to the securitisation framework to support the economic recovery in response to the COVID-19 crisis

Summary:

Regulation (EU) 2021/558 - adopted by the co-legislators on 31 March 2021 - introducing amendments to Regulation (EU) 575/2013 on prudential requirements for credit institutions and investment firms, known as the Capital Requirements Regulation (CRR). This is a text with EEA relevance.

Further information:

Regulation (EU) 575/2013 aims to strengthen the prudential requirements of banks, requiring them to keep sufficient capital reserves and liquidity. The overall objective is to make banks more robust and resilient in periods of economic stress. Securitisation is a tool through which banks can bundle loans, turn them into securities, and sell them onto capital markets. It can play an important role in enhancing the capacity of institutions to support the post-pandemic economic recovery, providing for an effective tool for funding and risk diversification for institutions.

This proposal aims to enhance that potential by introduced a number of targeted amendments. It includes the provision for a more risk-sensitive treatment for simple, transparent and standardised (STS) on-balance-sheet securitisation, as well as the removal of existing regulatory constraints to the securitisation of non-performing exposures (NPEs) embedded in the framework.

The draft law was tabled by the European Commission on 24 July 2020 as part of the so-called EU Capital Markets Recovery Package. It builds on reporting undertaken by the European Banking Authority (EBA). The Council of the European Union adopted its general approach on 16 October 2020. The European Parliament's relevant committee adopted a negotiating position on 10 November 2020, which was confirmed by plenary on 13 November. An informal agreement between the co-legislators on a compromise text was reached on 16 December. Following formal endorsement by the Council and Parliament, the Act was signed on 31 March 2021. It was published in the Official Journal on 6 April 2021.

• Primary Source

Official

EUR-LEX: COM(2020)283: Proposal for a Regulation amending Regulation (EU) No 575/2013 as regards adjustments to the securitisation framework to support the economic recovery in response to the COVID-19 pandemic https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2020:283:FIN

EUR-Lex: SWD(2020)281: Staff Working Document accompanying the Proposal https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2020:120:FIN

European Parliament: Legislative Observatory: Procedure File for Proposal on Capital Requirements Regulation (CRR): adjustments to the securitisation framework to support the economic recovery in response to the COVID-19 pandemic (2020/0156(COD)) https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2020/0156(COD)

European Parliament: Legislative Train Schedule: Adjustments to the EU Securisation Framework to help the recovery from the COVID-19 pandemic - Amendments to CRR https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-adjustments-to-crr-securitisation-during-covid/03-2021

European Commission: Publications: Coronavirus response: How the Capital Markets Union can support Europe’s recovery https://ec.europa.eu/info/publications/200722-proposal-capital-markets-recovery_en

European Commission: Press Release, 24/07/2020: Coronavirus response: Making capital markets work for Europe's recovery https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1382

European Commission: Coronavirus response: How the Capital Markets Union can support Europe's recovery (24 July 2020) https://ec.europa.eu/commission/presscorner/detail/en/qanda_20_1377

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