Market pros see chance for ABS to rebuild Europe’s economy

GlobalCapital and Afme convened a virtual roundtable to tackle the biggest issues facing securitization as the pandemic crisis continues. While other capital markets and the wider economy are reeling from the economic fallout stemming from Covid-19, European securitization is undergoing a regulatory rejuvenation, as the European Commission turns towards structured products as a solution to the coming wave of NPLs. Meanwhile, the market for synthetic ABS is being given a second look to help free bank balance sheets across Europe and spur lending to the real economy. Over the summer, the market saw the report from the senior forum on the Capital Markets Union, which included a number of recommendations on regulatory adjustments to improve the functioning of securitization in Europe. More recently the European Commission put forward a capital markets economic recovery package including measures related to securitization. The Commission has proposed extending the STS framework to synthetic securitizations or on-balance-sheet securitizations. The Commission has also put forward proposals to remove regulatory obstacles to the securitization of NPLs including changes to the regulatory capital treatment.