AFME: Joint industry letter warns absence of EU securitisation market is a strategic loss for Europe
10 November 2022
A group of nine organisations representing key participants in the European securitisation market have written a public letter to EU policymakers, calling on them to take urgent targeted measures to ensure that securitisation can support the European economy during a testing period marked by macroeconomic uncertainty.
The
group includes the Association for Financial Markets in Europe (AFME),
the Dutch Securitisation Association, the European Banking Federation
(EBF), the International Association of Credit Portfolio Managers
(IACPM), Leaseurope, Eurofinas, Paris EUROPLACE, PCS and True Sale
International (TSI).
The letter calls for urgent action as it highlights how securitisation
volumes in Europe have continued to decline in 2022, in sharp contrast
to the growth seen in other markets in recent years. The United States,
for example, recorded its highest ever issuance levels in 2020 and again
in 2021.
It is also a critical moment for the European securitisation market as
key regulatory workstreams are underway which could contribute to the
recovery of the market or exacerbate current regulatory imbalances. For
example, targeted measures in the prudential requirements for banks
under CRR3, and insurers under Solvency 2, together with a well-designed
EU Green Bond Standard, would be important steps towards a better
functioning market. The organisations are therefore calling on EU
legislators to use these discussions to introduce immediate adjustments
to securitisation-related calibrations and concrete mandates for more
risk sensitive revisions to be undertaken as a subsequent step. There
are also critical technical standards under preparation which could
negatively impact the market if further disproportionate requirements
are introduced.
The joint Association leaders write in the letter: “The absence of a
well-functioning securitisation market represents a strategic loss to
the European financial system. It is undermining the competitiveness of
European financial institutions and limiting their ability to recycle
capital to support new financing. It has encouraged institutional
investors to shift towards other products that do not offer the same
advantages in terms of protection, transparency and liquidity.”
“At the heart of the problem is a disconnect between the Commission’s
vision for securitisation in Europe – a tool making a significant
contribution to a well-functioning financial system that efficiently
finances the real economy – and aspects of the regulatory framework
which remain miscalibrated and, in practice, disincentivise issuance and
investment in securitisations, thus holding back the tool’s potential
to support the economy.”
The full letter can be found here
AFME
© AFME
