The European Parliament and the Council reached a provisional political agreement on 21 October on reviewing the EU securitisation framework, which the European Commission welcomed. It is the first completed legislative deliverable of the Savings and Investments Union. The changes simplify due diligence and transparency requirements and make the prudential treatment of securitisations under the Capital Requirements Regulation more sensitive to actual risk. The text still needs technical finalisation and formal approval by both institutions and will enter into force after publication in the Official Journal.

What it means: Securitisation lets banks pool loans, such as mortgages or business loans, and pass them to investors, freeing up capital for new lending. After the 2008 crisis the European framework became very strict and the market shrank, so banks kept more loans on their balance sheets. The Commission argues that simplification will increase lending capacity for businesses without bringing back the risks of the past. For Greece the topic is especially relevant, because securitisations under the Hercules scheme were the main tool for cutting non-performing loans. Greek banks now have experience structuring such deals, and a more flexible framework could help them use securitisation for performing loans too, freeing capital for SME financing. Businesses will not see a change right away, as the text still has to be approved and applied, and many details will be set in technical standards. In the longer run, though, the review could support greater credit availability, especially combined with the other Savings and Investments Union measures.

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