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04 December 2015

Council of the European Union agrees on Commission proposal for simple and transparent securitisation

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The European Commission welcomed the agreement at record speed at the Council on a legislative proposal to relaunch EU securitisation markets. This constitutes a good basis for further discussions with the European Parliament.

The Commission put forward its proposal on 30 September as part of its Action Plan for the Capital Markets Union. Well-functioning securitisation markets are also an objective of the Investment Plan for Europe. They will allow banks to lend more to the European economy to support growth and investments. The proposal introduces criteria for determining if securitisation instruments qualify as "simple, transparent and standardised", and therefore whether they are eligible for more appropriate prudential treatment.

Jonathan Hill, Commissioner for Financial Stability, Financial Services and Capital Markets Union, said: "Safe, transparent and standardised securitisation can help diversify funding within the economy, and free up new lending from banks to support growth and jobs. This proposal has moved at record speed and reflects the urgency with which we want to make progress on the Capital Markets Union. We think this will provide the right incentives for the financial sector, and the right safeguards to ensure financial stability in the EU. It is an important part of our early steps to boost capital markets, investment and economic growth in the EU. I hope that the European Parliament will also be able to make quick progress so that we can have this in effect as soon as possible to support the economy."

Securitisation is a transaction that enables a lender – often a bank - to refinance a set of loans such as mortgages, auto loans or leases, consumer loans or credit cards by pooling them and converting them into financial instruments, or 'securities', that can be sold to other investors.

The agreement by the Permanent Representatives’ Committee (Coreper) will be confirmed by the Council on 8 December 2015. Similarly to the Council, the European Parliament needs to agree its position to allow for a final agreement on the text between the two co-legislators.

Full press release

© European Commission

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