Sector developments and company hires

Aussie securitisation fund

The Australian government has introduced a A$2bn Australian Business Securitisation Fund, which will provide significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms. The fund will be administered by the Australian Office of Financial Management (AOFM), consistent with its prior involvement in the RMBS market in 2008.

Call for NPL body

A new European Commission Staff Working Document calls for an “industry body” to be established to issue and enforce “proper” operating and governance rules for European non-performing loan platforms, as well as to oversee their compliance. The paper also recommends that EU institutions and member states should discuss whether further/stronger incentives may be needed to spur seller participation in a European NPL platform. Overall, the Commission believes that there is no clear-cut case for public ownership/operation of a European NPL platform and that it appears preferable to further build on existing private initiatives. However, it recognises that these initiatives offer “limited geographic scope”, while the loan data used is not standardised across the market.

‘Proportionate’ supervision encouraged

European Supervisory Authorities (ESAs) have issued a statement encouraging competent authorities (CAs) to apply their supervisory powers in their enforcement of the Securitisation Regulation in a “proportionate and risk-based” manner. The ESAs say they have been made aware of severe operational challenges for reporting entities in complying with the legislation’s transitional provisions, which require that the CRA3 templates be used. Accordingly, when examining reporting entities’ compliance with the disclosure requirements of the Securitisation Regulation, CAs can take into account the type and extent of information already being disclosed by them on a case-by-case basis. The standardised templates to be used to fulfil transparency requirements under Article 7 of the regulation will be further specified in a European Commission Delegated Regulation, based on a set of draft regulatory and implementing technical standards developed by ESMA (SCI 5 October). ESMA and the Commission are currently considering how to address market concerns raised about some aspects of the ESMA disclosure templates, which are therefore unlikely to be adopted by 1 January 2019 and, as a result, transitional provisions will apply. Separately, the ESAs have also been made aware of challenges that EU banking entities are facing regarding complying with specific provisions of the CRR Amending Regulation relating to the scope of the Chapter 2 (due-diligence) requirements in the Securitisation Regulation; in particular, for subsidiaries engaging in local securitisation activities in third countries. In these cases, CAs can take into account the proposed changes to Article 14 of the CRR, whereby - based on the latest Trilogue Agreement - its scope is expected to be reduced.