The European Commission proposed on Tuesday to ease the EU’s strict securitisation rules for banks. The goal is to boost the underdeveloped securitisation market and free up capital for more lending, while still protecting financial stability.
Securitisation allows banks to bundle loans and sell them as securities to investors. This helps banks transfer risk and use the freed capital to issue new loans. The EU’s current rules, introduced in 2019 after the 2008 financial crisis, are seen as too strict and costly, limiting market growth.
The Commission’s proposal aims to simplify rules by reducing paperwork, easing disclosure requirements, and making due diligence checks less burdensome. Investors will no longer need to double-check if banks meet all criteria, as regulators will ensure compliance. The proposal also introduces a lighter transparency regime for private deals compared to public ones.
Maria Albuquerque, EU Financial Services Commissioner, said the reforms seek a better balance between risk and market activity. “If you take risk to zero, you kill all activity,” she said, emphasizing that financial stability remains a priority.
The Commission did not provide estimates on how much capital could be freed or how much lending might increase. However, it noted that the EU securitisation market is much smaller than the U.S. market—€1.6 trillion versus $14 trillion.
The proposal must be approved by EU governments and the European Parliament before becoming law. It is part of a broader EU effort to integrate capital markets and provide more funding options for businesses, especially to help them compete globally.
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