Banks face headaches over ABCP conduit concentrations

By Tom Brown
10 Dec 2020

European banks are looking to reduce their cost of funding by fitting their asset-backed commercial paper (ABCP) transactions with the ‘simple, transparent and standardised’ (STS) regulatory stamp. Fresh regulations are causing headaches for the issuers, however, prompting increased concerns about the effectiveness of the label.

Niche rules stemming from the EU’s Securitisation Regulation has been stumping many issuers, however, with lawyers called upon to answer a slew of legal questions left ambiguous by European authorities.

The sticking point is on concentration limits, putting a cap on the amount of space one obligor takes up ...

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