The European Council agreed its negotiating position on a package of targeted amendments to the EU prudential and regulatory framework for securitisation, aimed at reviving market activity while safeguarding financial stability. The mandate prepares the Council for negotiations with the European Parliament and is framed as an early deliverable under the EU’s Savings and Investment Union initiative. Under the Council position, bank capital requirements for securitisation exposures would be re-calibrated on a more risk-sensitive basis, with materially lower capital requirements for low-risk securitisations while keeping requirements for riskier securitisations at current levels. The mandate retains the Commission’s proposed “resilient” securitisation category and links it with the simple, transparent and standardised (STS) label to deliver deeper capital savings and incentives for safer practices. Administrative burdens would be reduced by allowing third-party verifiers to carry out STS-related assessments and by removing proposed administrative sanctions for institutional investors. On the demand side, the position raises the investment limit for undertakings for collective investment in transferable securities (UCITS) to acquire up to 50% of securities in a single public securitisation, from 10% currently. Additional changes include tighter homogeneity requirements for SME-backed pools seeking STS status while explicitly allowing multi-member-state SME loan pools, extra STS-linked safeguards for unfunded credit protection provided by insurers (or indirectly reinsurers) in synthetic securitisations, eligibility for STS for pre-operational project finance securitisations, and flexibility for third-country issuers to use alternative disclosure formats if EU investors receive the same substantive information as under EU templates. With the Council position agreed, negotiations with the European Parliament will start to reach final legal texts.
European Council 2025-12-19
European Council agrees negotiating position to revive and simplify EU securitisation rules
The European Council has agreed on its negotiating position for amendments to the EU prudential and regulatory framework for securitisation, aiming to boost market activity while ensuring financial stability. Key measures include recalibrating bank capital requirements for securitisation exposures, linking the "resilient" securitisation category with the simple, transparent, and standardised (STS) label, and raising the investment limit for UCITS. The mandate also proposes reducing administrative burdens and introducing additional safeguards for STS-linked securitisations.