Regulation 2021/558 - Amendment of Regulation (EU) No 575/2013 as regards adjustments to the securitisation framework to support the economic recovery in response to the COVID-19 crisis

EN

Official Journal of the European Union

L 116/25

The COVID-19 crisis is severely affecting people, companies, health systems and Member State economies. In its Communication of 27 May 2020 entitled ‘Europe’s moment: Repair and Prepare for the Next Generation’, the Commission stressed that liquidity and access to finance would continue to be a challenge in the months to come. It is therefore crucial to support the recovery from the severe economic shock caused by the COVID-19 pandemic by introducing targeted amendments to existing pieces of financial legislation.

Credit institutions and investment firms (institutions) will have a key role in contributing to the recovery. At the same time, they are likely to be affected by the deteriorating economic situation. Competent authorities have provided temporary capital, liquidity and operational relief to institutions to ensure that they can continue to fulfil their role in funding the real economy in a more challenging environment. For the same purpose, the European Parliament and the Council have already adopted certain targeted adjustments to Regulations (EU) No 575/2013 (4) and (EU) 2019/876 (5) of the European Parliament and of the Council in response to the COVID-19 crisis.

Securitisation is an important element of well-functioning financial markets since it contributes to diversifying the funding sources of institutions and releasing regulatory capital that can be reallocated to support further lending. Furthermore, securitisation provides institutions and other market participants with additional investment opportunities, thereby allowing portfolio diversification and facilitating the flow of funding to businesses and individuals both within Member States and on a cross-border basis throughout the Union.

It is important to reinforce the capacity of institutions to provide the necessary flow of funding to the real economy in the aftermath of the COVID-19 pandemic, while ensuring that adequate prudential safeguards are in place to preserve financial stability. Targeted changes to Regulation (EU) No 575/2013 as regards the securitisation framework would contribute to the achievement of those objectives and enhance the coherence and complementarity of that framework with the various measures taken at Union and national level to address the COVID-19 crisis.

The final elements of the Basel III framework published on 7 December 2017 impose, in case of securitisation exposures, a minimum credit rating requirement upon a limited set of protection providers only, namely entities that are not sovereign entities, public sector entities, institutions or other prudentially regulated financial institutions. It is therefore necessary to amend Article 249(3) of Regulation (EU) No 575/2013 to align it with the Basel III framework in order to enhance the effectiveness of national public guarantee schemes that support institutions’ strategies to securitise non-performing exposures (NPEs) in the aftermath of the COVID-19...