Revitalising the securitisation market is not a cure-all for deeper integration of capital markets

“Insurers welcome the goal of revitalising the securitisation market by easing rules for issuers and investors. However, our assessment is differentiated. 

A particularly positive aspect is the planned reduction of excessive reporting requirements and audit obligations specific to securitization. At the same time, it must be ensured that investors such as insurers continue to have access to all relevant information necessary for risk assessment.

It is also important that the announced relief in capital requirements for insurers is now implemented as indicated by the European Commission.

At the same time, we must be clear: adjustments to the securitisation framework are not a cure-all for creating or further developing an integrated European capital market. What is crucial now is to vigorously advance the Capital Markets and Savings Union to establish a deeply integrated capital market.”

Background

The Securitisation Regulation enables the refinancing of loans—typically issued by banks or companies—through their conversion into tradable securities. The lender bundles selected portions of its loan portfolio (e.g. loans, leasing contracts, or consumer credit), assigns them to different risk categories tailored to different investors, and thereby offers investment opportunities that would otherwise be inaccessible to them. The Securitisation Regulation is a response to the 2008 financial crisis, during which inadequate regulation of securitised products was identified as one of the contributing factors.