EBA publishes final guidelines on significant credit risk transfer for securitisation transactions

The European Banking Authority (EBA) published today a final set of Guidelines that will support both originator institutions and competent authorities in the assessment of significant risk transfer (SRT) for securitisation transactions. These Guidelines will be part of the EU Single Rulebook in the banking sector and will ensure harmonised assessment and treatment of significant risk transfer across all EU Member States.

The EBA recognizes that securitisation in a well-defined prudential framework is beneficial to banks and is a key funding tool for the real economy. Furthermore, it is a useful tool to achieve credit risk transfer and risk-sharing in the financial system and to support the current deleveraging and de-risking process of EU banks without inducing an excessive contraction in the real economy.

The Guidelines published today aim at ensuring a more consist approach in the assessment of significant risk transfer across the EU and at achieving a level playing field in this area. The Guidelines include (i) requirements for originator institutions when engaging in securitisation transactions for SRT; (ii) requirements for competent authorities to assess transactions that claim SRT; (iii) requirements for competent authorities when assessing whether commensurate credit risk has been transferred to independent third parties; and finally (iv) a standard template on how competent authorities should provide information to EBA for approved transactions claiming SRT.

Legal basis and next steps

These Guidelines have been developed in accordance with Article 243 or Article 244 of the Capital Requirements Regulation (CRR) and are applicable for all transactions originated from the day of adoption of the Guidelines.

The EBA will provide advice to the European Commission by 31 December 2017 on whether a binding technical standard is required on SRT.