Sector developments and company hires

The European Commission has adopted new EU banking rules under CRR 3 and CRD 4, with the aim of ensuring that EU banks become more resilient to potential future economic shocks, while contributing to Europe's recovery from the Covid-19 pandemic and the transition to climate neutrality. The Commission notes that while the overall level of capital held by EU banks is on average satisfactory, some of the problems that were identified in the wake of the financial crisis have not yet been addressed.

The package of rules being adopted comprises three elements. First is the implementation of Basel 3, while taking into account the specific features of the EU's banking sector.

The second element is sustainability: the new rules will require banks to systematically identify, disclose and manage ESG risks as part of their risk management. Finally, the package provides stronger enforcement tools for supervisors overseeing EU banks.

Separately, the Commission has also issued a call for advice to the joint committee of the ESAs (EBA, ESMA and EIOPA) regarding the review of the prudential framework for securitisation; in particular, improving capital calibrations under CRR and Solvency II for banks and insurers and the LCR treatment of securitisations. The timeframe has disappointed the industry, however, given that the ESAs are required to report by September 2022. As such, any resulting reforms will likely be introduced towards the end of next year.

In other news…

Barrow Hanley Global Investors has announced plans to launch its first CLO fund. The launch of the Barrow Hanley CLO Fund I LP is part of its new strategy to build out diversified alternative product lines at the firm and is expected to close by the end of the year.

The new CLO will be backed by the firm’s strategic partner, Perpetual Limited, in line with Perpetual’s aims to expand its product range and global reach.

Plans are for Perpetual, and the employees of both Perpetual and Barrow Hanley, to invest 35% of the equity for this first CLO fund launch.