Regulation (EU) 2021/558

What it is

to amend the capital requirements regulations to maximise the capacity of institutions to lend and to absorb losses related to the COVID-19 pandemic, while still ensuring their continued resilience. PROPOSED ACT: Regulation of the European Parliament and of the Council. ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council. BACKGROUND: Regulation (EU) No 575/2013 of the European Parliament and of the Council, known as the Capital Requirements Regulation (the CRR), establishes together with Directive 2013/36/EU, known as the Capital Requirements Directive (the CRD), the prudential regulatory framework for credit institutions operating in the Union. One set of amendments, contained in Regulation (EU) 2017/2401, has implemented the revised securitisation framework adopted by the BCBS in December 2014 (the revised Basel framework). The Committee on Economic and Monetary Affairs adopted the report by Othmar KARAS (EPP, AT) on the proposal for a regulation of the European Parliament and of the Council 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 The proposed regulation aims to maximise the capacity of institutions to lend and to absorb losses related to the COVID-19 pandemic, while ensuring their continued resilience. The Commission proposed three targeted amendments to the Capital Requirements Regulation (CRR) increasing the overall risk-sensitivity of the EU securitisation framework that would make the recourse to the securitisation tool more economically viable for institutions within a prudential framework adequate to safeguard the EU financial stability. The committee recommended that the European Parliament's first-reading position should amend the Commission proposal as follows: A specific treatment for the securitisation of NPEs should be introduced building on the European Banking Authority’s (EBA) opinion and taking due account of the Union specificities of the NPE securitisation market and the market for NPEs as well as of the developments in the international standards for exposures to NPE securitisations. To allow for the due assessment of the relevant Basel standard once it is published, the Commission should be mandated to review the prudential treatment of NPE securitisations. The EBA should be mandated to monitor the market for securitisations of non-performing exposures and to report to the European Parliament and the Commission on the convenience of reviewing the regulatory capital treatment of NPE securitisations, having regard to the state of the NPE securitisation market, in particular, and the market for NPEs, in general, following the COVID-19 crisis. Specific framework for simple, transparent and standardised (STS) on-balance sheet securitisations The regulation would introduce a risk-sensitive calibration more appropriate for on-balance sheet STS securitisations, building on the current preferential regulatory treatment of senior tranches in SME portfolios. The amended text also provides for…

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