Month: May 2017

  • Tuesday 6 June: launch of the European Drug Report 2017

    European Commission - Upcoming events The news: On 6 June 2017, Commissioner for Migration, Home Affairs and Citizenship Dimitris Avramopoulos, together with Laura d'Arrigo, Chair of the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) ...

  • Karin Rysavy, full member of the Board of Directors

    By letter dated 28 April 2017, the Republic of Austria nominated, Ms Karin RYSAVY (European Affairs, Ministry of Finance, Austria) for appointment as a Full Member of the Board of Directors of the EIB to succeed Mr Wolfgang NITSCHE, who had tendered hi...

  • Karin Rysavy, full member of the Board of Directors

    By letter dated 28 April 2017, the Republic of Austria nominated, Ms Karin RYSAVY (European Affairs, Ministry of Finance, Austria) for appointment as a Full Member of the Board of Directors of the EIB to succeed Mr Wolfgang NITSCHE, who had tendered hi...

  • Capital markets union: agreement reached on securitisation

    On 30 May 2017, the presidency reached agreement with European Parliament representatives on proposals aimed at facilitating the development of a securitisation market in Europe. 

    A framework for securitisation is one of the main elements of the EU's 2015 plan to develop a fully functioning capital markets union by the end of 2019. Developing a securitisation market will help create new investment possibilities and provide an additional source of finance, particularly for SMEs and start-ups. 

    “This initiative will encourage financial market integration in Europe and make it easier to lend to households and businesses", said Edward Scicluna, minister for finance of Malta, which currently holds the Council presidency. "Tonight's agreement with MEPs will allow us to relaunch the securitisation market, defining a model for simple, transparent and standardised securitisations."

    The agreement will be submitted to EU ambassadors for endorsement on behalf of the Council, following technical finalisation of the text. Parliament and Council will then be called on to adopt the proposed regulation at first reading.

    Securitisation is the process by which a lender - typically a bank - refinances a set of loans or assets, such as mortgages, automobile leases, consumer loans or credit card accounts, by converting them into securities. The repackaged loans are divided into different risk categories, tailored to the risk/reward appetite of investors. 

    Following the US subprime cirisis of 2007-08, public authorities took steps to make securitisation transactions safer and simpler, and to ensure that incentives are in place to manage risk. As a result of these reforms, all securitisations in the EU are now strictly regulated. However, in contrast to the United States where markets have recovered, European securitisation markets have remained subdued. This despite the fact that EU securitisation markets withstood the crisis relatively well. 

    Building on what has been put into place to address risk, the proposals differentiate simple, transparent and standardised (STS) products. The concept of 'simple, transparent and standardised' refers not to the underlying quality of the assets involved, but to the process by which the securitisation is structured. 

    Issues resolved 

    One of the main political issues resolved relates to a so-called risk retention requirement. This refers to the interest in the securitisation that originators, sponsors or original lenders of securitisations need to retain themselves. The requirement will ensure that securitised products are not created solely for the purpose of distribution to investors. 

    The negotiators agreed to set the risk retention requirement at 5%, in accordance with existing international standards and in line with the Council's negotiating position. 

    Other elements agreed with the Parliament include: 

    • the creation of a data repository system for securitisation transactions, which will increase market transparency;
    • a light-touch authorisation process for third parties that assist in verifying compliance with STS securitisation requirements. The aim is to prevent conflicts of interest. The text makes clear that, even when a third party is involved in the STS certification process, liability for compliance with the rules remains completely with originators, sponsors, original lenders and securitisation special purpose entities.

    Two regulations 

    The agreement with the Parliament covers two draft regulations: 

    • one setting rules on securitisations and establishing criteria to define STS securitisation;
    • the other amending regulation 575/2013 on bank capital requirements. 

    The first brings together rules that apply to all securitisations, including STS securitisation, that are currently scatttered amongst different legal acts. It thus ensures consistency and convergence across sectors (such as banking, asset management and insurance), and streamlines and simplifies existing rules. It also establishes a general and cross-sector regime to define STS securitisation. 

    The text amending regulation 575/2013 sets out capital requirements for positions in securitisation. It provides for a more risk-sensitive regulatory treatment for STS securitisations.

    The regulations require a qualified majority for adoption by the Council, in agreement with the European Parliament. (Legal basis: article 114 of the Treaty on the Functioning of the European Union.)

  • Capital markets union: Agreement on venture capital rules

    EU rules on venture capital and social enterprises are to be adjusted with the aim of boosting investment in start-ups and innovation.

    On 30 May 2017, representatives of the Council and the European Parliament agreed on amendments to rules governing investment funds in this sector.

    The proposed regulation is part of the EU's plan to develop a fully functioning capital markets union, diversifying funding sources for Europe's businesses and long-term projects. It is also linked to the EU's investment plan for Europe.

    "If European SMEs are to grow and develop, it is indispensable that financing - both bank and capital market financing - is readily available",said Edward Scicluna, minister for finance of Malta, which currently holds the Council presidency. "This regulation will help stimulate market financing and thereby boost economic growth."

    The EU has been falling behind the United States in this sector. According to the Commission, an extra €90 billion would have been available between 2009 and 2014 for financing European companies if venture capital markets had been as developed as in the US.

    The proposal adjusts rules adopted in 2013 to encourage investment in European venture capital funds (Euveca) and European social entrepreneurship funds (Eusef).

    Amending regulations 345/2013 and 346/2013, it makes those funds available to fund managers of all sizes and expands the range of companies that the funds can invest in. It also makes the cross-border marketing of such funds cheaper and easier.

    Regulations 345/2013 and 346/2013 lay down requirements for investment in Euveca and Eusef funds, which relate respectively to:

    • young and innovative companies;
    • enterprises whose aim is to achieve a positive social impact.

    Presidency and Parliament representatives agreed on the following amendments:

    • larger fund managers, i.e. those with assets under management of more than €500 million, will henceforth be able to market and manage Euveca and Eusef funds;
    • the range of companies in which Euveca funds can invest is expanded to include unlisted companies with up to 499 employees (small mid-caps) and SMEs listed on SME growth markets.

    Next steps

    The agreement will be submitted to EU ambassadors in the coming days for endorsement on behalf of the Council. The Parliament and the Council will then be called on to adopt the regulation without further discussion.

    The regulation will start to apply three months after its entry into force.

  • Capital markets union: Agreement on venture capital rules

    EU rules on venture capital and social enterprises are to be adjusted with the aim of boosting investment in start-ups and innovation.

    On 30 May 2017, representatives of the Council and the European Parliament agreed on amendments to rules governing investment funds in this sector.

    The proposed regulation is part of the EU's plan to develop a fully functioning capital markets union, diversifying funding sources for Europe's businesses and long-term projects. It is also linked to the EU's investment plan for Europe.

    "If European SMEs are to grow and develop, it is indispensable that financing - both bank and capital market financing - is readily available",said Edward Scicluna, minister for finance of Malta, which currently holds the Council presidency. "This regulation will help stimulate market financing and thereby boost economic growth."

    The EU has been falling behind the United States in this sector. According to the Commission, an extra €90 billion would have been available between 2009 and 2014 for financing European companies if venture capital markets had been as developed as in the US.

    The proposal adjusts rules adopted in 2013 to encourage investment in European venture capital funds (Euveca) and European social entrepreneurship funds (Eusef).

    Amending regulations 345/2013 and 346/2013, it makes those funds available to fund managers of all sizes and expands the range of companies that the funds can invest in. It also makes the cross-border marketing of such funds cheaper and easier.

    Regulations 345/2013 and 346/2013 lay down requirements for investment in Euveca and Eusef funds, which relate respectively to:

    • young and innovative companies;
    • enterprises whose aim is to achieve a positive social impact.

    Presidency and Parliament representatives agreed on the following amendments:

    • larger fund managers, i.e. those with assets under management of more than €500 million, will henceforth be able to market and manage Euveca and Eusef funds;
    • the range of companies in which Euveca funds can invest is expanded to include unlisted companies with up to 499 employees (small mid-caps) and SMEs listed on SME growth markets.

    Next steps

    The agreement will be submitted to EU ambassadors in the coming days for endorsement on behalf of the Council. The Parliament and the Council will then be called on to adopt the regulation without further discussion.

    The regulation will start to apply three months after its entry into force.