EBA publishes its report on the creation of an STS framework for synthetic securitisations

The European Banking Authority (the “EBA”) has recently published its report on the feasibility of a framework for simple, transparent and standardised (“STS”) synthetic securitisations (the “EBA Report”). The EBA Report follows a discussion paper published by the EBA on 24 September 2019 (the “EBA Discussion Paper”). We considered some of the key aspects of the EBA Discussion Paper in a previous legal update.

The EBA has reaffirmed its recommendations in the EBA Discussion Paper for the establishment of a cross-sectoral framework for STS synthetic securitisation, limited to balance-sheet securitisations, and that for any synthetic securitisation to be STS, it should meet the specified STS criteria for such securitisations.  In addition, the EBA has given further consideration to whether STS synthetic securitisations could benefit from differentiated regulatory treatment and has concluded that this could be justified for senior tranches subject to certain conditions.

In this Legal Update, we consider the proposals contained in the EBA Report, including the extent to which they diverge from the draft proposals in the EBA Discussion Paper.

Read the Legal Update here.

For more information about the topics raised in this Legal Update, please contact Chris Arnold on +44 20 3130 3610, Harjeet Lall on +44 20 3130 3272 or Robyn Llewellyn on +44 20 3130 3990.

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