CEBS consultation paper on guidelines on Article 122a of the Capital Requirements Directive

The Committee of European Banking Supervisors (CEBS) today publishes its consultation paper (CP40) on guidelines to the new Article 122a of the Capital Requirements Directive (CRD).

Article 122a of the CRD provides new requirements to be fulfilled by credit institutions when acting in a particular capacity, such as originator, sponsor, or original lender and also when investing in securitisations. These  include retention - on an on-going basis - of a material net economic interest of not less than 5% (so called “skin in the game”), due diligence and, disclosure.

This consultation paper is in response to the amendments to the CRD by Directive 2009/111/EC  relating to securitisations, which requests CEBS to elaborate guidelines for the convergence of supervisory practices with regard to Article 122a, including the measures taken in case of breach of the due diligence and risk management requirements. The amendments have to be transposed into Member States’ national law by 31 October 2010 and to be applied from 31 December 2010.

The paper seeks to provide general considerations on the application of the new Article, clarify specific aspects of the detailed requirements and promote supervisory convergence. It is structured paragraph by paragraph in the order of the Directive text and puts a number of specific questions on the several parts of the guidelines.

CEBS submits its initial views for a public consultation which starts today and runs until 1 October 2010. Comments received will be published on CEBS’s website unless respondents request otherwise. Please send your comments to the following email address: cp40@c-ebs.org.

CEBS would particularly welcome market participants’ views on the questions set out across the paper. The consultation is open to all interested parties, including supervised institutions and other market participants. A public hearing will take place on 22 July 2010 at CEBS’s premises in order to allow all interested parties to present their comments.