CEBS Says No Bank Hedging Against Bank’s Retained 5%

Sponsors and originators of securitizations will not be allowed to hedge against the 5% retained slice under the latest guidelines for article 122a of the capital requirements directive II. Banks issuing deals will have to be fully exposed to the risk of retaining the 5% of their transactions, more commonly referred to as “skin in the game,” according to last week’s Committee of European Banking Supervisors consultation paper on the issue.