European Commission Proposes Amended Framework for the Securitisation of Non-Performing Exposures

The proposal is part of an effort to aid economic recovery and enhance the capacity of banks to lend to corporates and SMEs.

The European Commission’s proposal to amend the Securitisation Regulation1 and the Capital Requirements Regulation (the CRR)2 comprise part of its Capital Markets Recovery Package to help mitigate the economic effects of the coronavirus pandemic. Although the EU regulatory framework for securitisations is due for a comprehensive review with possible legislative amendments by January 2022, in July 2020 the Commission brought forward certain targeted amendments, in an effort to aid economic recovery and enhance the capacity of banks to lend to corporates and, in particular, small and medium-size enterprises (SMEs). If adopted, these amendments (summarised in detail below) will have direct effect without the need for implementation by Member States at the national level.