EBA Report on Asset Encumbrance: September 2015
On October 1, 2015, the European Banking Authority (EBA) published its first report analyzing asset encumbrance in EU banks.
The aim of the report is to monitor the extent of and the changes in the levels of asset encumbrance at an EU level and the sources for asset encumbrance. The report is based on data reported in December 2014 and March 2015 in accordance with the implementing technical standards on asset encumbrance reporting contained in European Commission Implementing Regulation 2015/79.
The EBA found there was no indication of a general increase in the level of asset encumbrance across EU banks in recent years, based on a comparison with a similar analysis performed by the European Systemic Risk Board in 2011. In March 2015, the overall weighted average encumbrance ratio was 27%, with a wide dispersion across institutions and countries.
Legislative Proposal for an EU Framework for Simple, Transparent and Standardized Securitization
On September 30, 2015 the European Commission (EC) published a legislative proposal for an EU framework for simple, transparent and standardized securitization. It has also published a legislative proposal for a regulation amending the Capital Requirements Regulation (Regulation 575/2013) (CRR) which deletes certain articles and extensively revises the capital requirements for securitizations.
The proposed Securitization Regulation is based on what has been put in place in the EU to address the risks in complex and risky securitizations but is intended to help differentiate simple, transparent and standardized products and apply a more risk-sensitive prudential framework.
The purpose of the CRR Amendment Regulation is to revise the EU regime relating to capital changes for credit institutions and investment firms originating, sponsoring or investing in securitization instruments, to provide for a more risk-sensitive regulatory treatment for simple, transparent and standardized securitizations.
The proposals are part of the Capital Markets Union action plan adopted by the EC on September 30, 2015.
European Commission Adopts Delegated Regulation Amending Solvency II Delegated Regulation on Treatment of infrastructure and ELTIF Investments
The European Commission has adopted a Delegated Regulation amending the Solvency II Delegated Regulation (EU 2015(35)) concerning the calculation of regulatory capital requirements for several categories of assets held by insurance and reinsurance undertakings, in particular infrastructure investments and investments in European long-term investment funds (ELTIFs).
The aim of the amending Regulation is to remove specific regulatory impediments to the financing of long-term investment projects by insurers. The revisions made to the Solvency II Delegated Regulation relate to issues including:
· Infrastructure investments. The amending Regulation introduces a specific treatment in the solvency capital requirements for infrastructure investments (being investments in special purpose entities that own, finance, develop or operate infrastructure assets that provide or support essential public services).
· Investments in ELTIFs. The amending Regulation extends to ELTIFs the provisions in the Solvency II Delegated Regulation concerning the treatment of European venture capital funds and European social entrepreneurship funds.
The amending Regulation also contains provisions concerning the treatment of equities traded on multilateral trading facilities and the scope of the equity transitional measure in Article 173 of the Solvency II Delegated Regulation. The next step will be for the Council of the EU and the European Parliament to consider the amending Regulation. The Commission intends the amendments made by the amending Regulation to be in place as soon as possible.
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