A new Dedicated EU Regulatory Regime for NPL Securitisations?

NPE Securitisation Framework Regulation Proposal: proposed amendments

As a result of the eurozone economy plunging into historic recession due to the COVID-19 pandemic, a new wave of non-performing loans is expected to hit European banks’ balance sheets. This is likely to translate into increased capital requirements and, in turn, will almost certainly affect banks’ lending capabilities at a time when they are under pressure to expand as much as possible their credit support, especially to corporates. In the attempt to support financial markets helping the European Union to recover from the coronavirus crisis, on July 24th the EU Commission issued two proposals of proposed targeted amendments to the capital markets regulatory framework.

The EU Commission’s package includes, inter alia, certain improvements to the securitisation rules, addressing long-standing issues of the current securitisation framework in connection with the regulatory treatment of securitisations of non-performing exposures (the “NPE Securitisation Proposal”).

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