GlobalCapital’s securitization team had a busy Friday. As well as discussing bank capital and lender M&A on Another Fine Mezz, George Smith and Tom Hall made a visit to Bank of America to hear the research team’s 2026 outlook - more on that coming on Tuesday.
A report from the same researchers, published on Monday, is also an interesting read. It has details, “heard through the Brussels grapevine”, of the European Council’s near final revisions to the European Commission’s proposed changes to the EU’s securitization regulation and Capital Requirements Regulation.
As a reminder, the Commission made its proposals over the summer, giving both the council, made up of the heads of the member states, and the directly elected European Parliament the opportunity to amend the proposals, before the three bodies agree on the final version.
There are also changes in the works to the Solvency II and liquidity coverage ratio treatment of securitizations, but as those are level two changes, the Council and Parliament cannot amend, only agree or not.
Among the industry’s big concerns with the Commission’s securitization regulation proposal was the potential for heavy sanctions on investors who did not comply with their due diligence requirements and that investors were unable to delegate those requirements to an asset manager.
“Due diligence can be delegated as is the current regime and the much dreaded [European Commission] proposed sanctions seem to have been removed,” BofA Research says of the Council’s draft.
That, along with the other draft tweaks suggest the market has room for a measure of optimism.
“Overall, the signals through the grapevine are positive, but the lack of full detail and the pending draft by [the European parliament] next year and a tripartite process in the autumn are keeping us cautious (and undecided) on the final outcome and market impact,” the researchers conclude.
Some might be particularly heartened by that, given the ECB last month joined Eiopa in taking a sceptical view of many of the Commission’s plans.
