Sector developments and company hires

Amended risk retention RTS published
The EBA has published its final draft regulatory technical standards (RTS) specifying the requirements for originators, sponsors and original lenders related to risk retention, as laid down in the Securitisation Regulation and as amended by the Capital Markets Recovery Package (CMRP). The RTS aim to provide clarity on the risk retention requirements, thereby ensuring a better alignment of interests and the reduction of moral hazard risk - thus contributing further to the development of a sound, safe and robust securitisation market in the EU.

The EBA notes that the minimum retention requirement of 5% of the material net economic interest in a securitisation is essential to ensure that sell-side parties have ‘skin in the game’, thereby addressing the issue of potential misalignment of interest between originators, sponsors and original lenders and investors. Several modifications have been made to the 2018 EBA RTS on risk retention, which were not implemented in a Delegated Regulation by the European Commission, to ensure consistency with the new mandate and to provide further clarity on some specific aspects; namely, the adverse selection of assets by originators.

The modifications due to the CMRP focus on the modalities of risk retention in non-performing exposure (NPE) securitisations and the impact of fees payable to retainers on the risk retention requirement. These changes aim to facilitate the securitisation of NPEs and are part of the EBA’s broader work on supporting the functioning of the secondary markets for NPEs.

In addition, the RTS provide further clarity on the application of the risk retention requirement to resecuritisations, as well as the treatment of synthetic excess spread as a possible form of compliance. Finally, while these RTS will replace the existing 2014 Commission Delegated Regulation, the Securitisation Regulation contains transitional provisions regarding the application of the existing Delegated Regulation to securitisations whose securities were issued before its application date.

In other news…

EMEA
Martin Nijboer has joined STS Verification International as executive director, with a main focus on marketing. Nijboer gained his securitisation experience by structuring ING’s own covered bond and RMBS programmes within the bank’s capital management department since 2007. In 2014, he moved with his team to the commercial side within ING Financial Markets, offering securitisation services and sub-products to external clients - including other European banks and auto captives.

Financial support pilot unveiled
Arrow Global has launched a new partnership with the social enterprise, IncomeMax, as the firm continues working to improve support to customers. The pilot scheme will enable Arrow customers to access IncomeMax financial support services, including helping keep them on track with payments and improve their credit scores. Trained staff on the Arrow team will work to identify and refer customers to IncomeMax, which will then assist these vulnerable customers.