EU Parliament adopts new securitization rules – Karas chief negotiator – New investment opportunities and more leeway for banks in lending to households and SMEs
Brussels (OTS) – “What was once poison is becoming medicine for economic recovery after the corona pandemic. Correctly dosed and used, the financial instrument of securitisations can help with reconstruction, because new investment opportunities arise and banks have more leeway for granting fresh loans to households and banks small and medium-sized enterprises. I am glad that the European Parliament was able to push through important improvements in tough negotiations in order to be able to optimally achieve these objectives, “said Othmar Karas, Vice-President of the European Parliament and its chief negotiator for the securitization rules, about today’s plenary debate and tomorrow Plenary vote on the final version of the new EU securitization rules (“trialogue result”).
When banks resell outstanding loans or other assets in packages as negotiable securities, this is known as securitization. This relieves the bank balance sheets and thus boosts lending. “With a comprehensive package of measures, we want to ensure that the European capital market can better support an economic upswing from the crisis as quickly as possible. Simple, transparent and standardized securitisations are an important component of the Capital Markets Union and help ensure that risks are borne by those who who are best able to do this, “says Karas.
The core of the revision are new rules for so-called “on-balance-sheet” securitisations and bad loans, relaxed capital requirements, new transparency regulations, the establishment of a sustainable securitization label in response to climate challenges and more action against potential tax avoidance in global tax havens. “We want to further improve the strict rules that we introduced more than three years ago so that securitisations can take on an even more meaningful economic task. Because in the American subprime crisis we saw how an overdose of securitisations can become a fire accelerator “explains Karas.
Background: In the subprime crisis at the beginning of the financial crisis in 2008, non-transparent and unregulated multiple securitisations drove the US financial system to the brink of collapse. Because of this securitization excess, the financial instrument had a bad reputation for a long time. With the ban on the re-securitization of securitisations adopted by the EU more than three years ago, strict transparency regulations and EU certification, the advantages of securitization are used and misuse is prevented.
The latest EU rules for securitisations, which the European Parliament will adopt tomorrow, will most likely come into force in April 2021. (Enough)
Inquiries & contact:
Dr. Othmar Karas MEP, Tel .: + 32-2-28-45627,
othmar.karas@ep.europa.eu
Wolfgang Tucek, EVP press service, Tel .: + 32-484-121431,
wolfgang.tucek@ep.europa.eu
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