Sector developments and company hires

‘Too early to tell’ for Sec Reg

The European Commission has released its report on the functioning of the Securitisation Regulation, as mandated under Article 46 of the Securitisation Regulation. The headline takeaway is that since the regulation only came into force in 2019, the Commission believes it is too early to tell whether the regulation is working and so no meaningful changes were proposed.

“The full implementation of the framework is still ongoing, with a few regulatory technical standards still under preparation. Likewise, as the questions on the jurisdictional scope show, for example, both market participants and supervisors are still in the process of translating the legal provisions into practice. Hence, the Commission believes that more time is needed to get a full picture of the impact of the new securitisation framework,” the report states.

Nonetheless, the Commission believes that the Securitisation Regulation contributes significantly to achieving the legislation’s core objective of establishing an EU securitisation market that helps finance the economy without creating risks to financial stability. “Overall, the market seems to work reasonably well, even though expectations for a highly dynamic market with increasing volumes and a growing number of participants do not yet seem to have been fulfilled. However, this first official stock-take of the new securitisation framework also raised a number of issues with the new framework that are considered to play a role in why the EU securitisation market has so far not grown as much as the initiators of the new framework had hoped,” it notes.

The report points out that concerns focus mainly on claims that complying with transparency obligations is resource-intensive, without producing much added value for the investor, particularly in the case of private transactions. The Commission acknowledges that there is room for improvement, but believes that improvements could be implemented without the need to change the Securitisation Regulation. As such, it has invited ESMA to revisit the regulatory and implementing technical standards that set out the details of the transparency regime.

The Commission says it remains “fully committed” to the aim of creating the framework for a thriving and stable EU securitisation market. “Such a market is an indispensable building block of a genuine Capital Markets Union and might become even more important for tackling the challenges of financing economic activity in the significantly more difficult market environment that seems to be evolving at the moment. The Commission will therefore continue to closely monitor the securitisation market and intervene, if and when deemed appropriate, to fully reap the benefits of a thriving securitisation market for the EU.”

In its analysis of the report, PCS suggests that there was “little to cause surprise to anyone who had been listening to the clear messaging coming from Brussels”. The organisation argues that the real battlefield that will determine the success or failure of the European securitisation market is not reform of the Securitisation Regulation, however.

“It lies with the necessary changes to the prudential rules, specifically the capital requirements under the CRR and Solvency II for insurance companies and the rules on the Liquidity Coverage Ratio. Those were explicitly not in scope of this review, but are subject to a now overdue response to a call for advice by the Commission to the Joint Committee of the ESAs,” PCS notes.

The organisation says that it - like many other market participants - rejects the notion that the rules are too recent to be changed and would be “loath to see this argument trotted out to justify inaction on the prudential front, where incontrovertible cases for change can be made”.

In other news….

EMEA

Wilmington Trust has appointed Darren Levene as head of transaction management for global capital markets, Europe, based in London. In this newly created role, he will support the firm’s structured finance businesses initially in the UK and Ireland, as it seeks to expand in Europe. Levene was previously in the restructuring group, agency and trust at Citi, and before that worked at Law Debenture, Deutsche Bank, Linklaters and Wilde Sapte.

Sustainable SRT inked

Glennmont Partners has disclosed its first investment in a significant risk transfer transaction, following the first close of its energy transition enhanced credit strategy at €250m. The transaction references a €1bn portfolio comprising over 75 loans diversified across five European countries. The portfolio covers a range of sustainable infrastructure sectors, including onshore wind, offshore wind, solar PV, solar CSP and digital infrastructure.