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ECB Securitisation Supervision

AUTHORs: Turlough Galvin Services: Finance and Capital Markets DATE: 21/05/2021

We have written about various amendments to the Securitisation Regulation and about the EU’s Capital Market Recovery Package. There will continue to be many further related developments in the future, but some ramifications are already apparent.

One of these occurred when the European Central Bank (“ECB”) announced on 14 May 2021 its decision to start ensuring that the banks it directly supervises comply with the requirements for risk retention, transparency and resecuritisation contained in Articles 6-8 of the Securitisation Regulation. 

The announcement states that risk retention, transparency and resecuritisation requirements are prudential in nature and should therefore be supervised by the competent prudential supervision authorities and that, as a result, the supervision of risk retention, transparency and resecuritisation requirements is an ECB competence. The ECB further says that its decision “further clarifies the implementation of the regulatory framework, which is an important precondition for a well-functioning securitisation market.”

Over the coming months, the ECB will define precisely how it intends to perform these supervisory tasks and communicate further details on its approach, including as to obligations for banks to notify their supervisor of securitisation-related activities.

Although the exact approach the ECB will take is not currently known, its increased involvement in the securitisation sector is likely to involve some new requirements for relevant banks. We will monitor the progress of this initiative.

For further information, please contact Turlough Galvin, Alan Keating, Christian Donagh, Richard Kelly or your usual Matheson contact.