After the consultation in 2021 now the final draft
The European Banking Authority (EBA) has today published the final draft of technical standards setting out the requirements for risk retention for securitisations, RTS risk retention, on 12 April 2022. This follows last year’s consultation on the proposals. This RTS risk retention is now still going through the legislative process of the European Commission (“adopted by EU Commission”) and will enter into force on the twentieth day after its publication in the Official Journal of the European Union. A concrete date has therefore not yet been set.
The crucial topics of the RTS from a market perspective
The RTS is largely in line with the consultation, including the provisions on securitisation of non-performing loans (“NPL”). It also regulates the recognition of synthetic excess spreads as a form of risk retention as well as the approval of re-securitisations for legitimate purposes. In addition to the final draft of the RTS, the EBA’s publication also includes a summary of the Q3 2021 public consultation with comments on the points noted.
Conclusion
It is to be welcomed that the provisions on risk retention, which have only been in draft form since 2018, will now soon become legally binding and that the rules on securitisation of NPLs established by the Capital Markets Recovery Package 2021 are also covered.