European Secured Notes - Coming to a Bank Near You?

The bank-funding instrument is designed to unlock liquidity for SME loans.

Key Points -

..The impact of COVID-19 on European small and medium-sized enterprises (SMEs) is expected to be severe1 — further underscoring the business case for a diversity of instruments designed to stimulate access to financing for SMEs.

..European Secured Notes (ESNs) are a bank-funding instrument typically issued or guaranteed by a credit institution and further backed by a pool of on-balance-sheet SME loans. Several national jurisdictions and issuing banks have led “test cases” for ESNs that offer helpful insights that could inform the final product guidelines to be adopted by European regulators.

..A common regulatory framework for ESNs, promulgated by the European Commission (the Commission) and endorsed by the European Parliament, could provide further firepower for SME loan origination by European banks and potentially facilitate access to the US market.

Please see full Alert below for more informtaion.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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