Good afternoon,

Today in College, we have approved the securitisation package.

Let me briefly explain what this is about. Securitisation is a financial market tool that enables banks to bundle parts of their assets, such as loans, and sell these bundled loans to other market participants like insurance companies, pension funds, or other banks.

This is significant because it gives banks more capacity to lend. The proposed changes will enhance this efficiency.

We anticipate increased lending—potentially at lower costs—to the economy, businesses, especially SMEs, and households. Additionally, we expect improved connections between banking and capital markets, as these bundled loans—these securitisations—will be traded as capital market products. This will also enhance risk management by distributing risk across the financial sector.

It is essential to note that while this instrument caused past issues in financial markets, particularly during the financial crisis, it is crucial to distinguish between the instrument and its misuse.

The instrument itself is vital for financial markets. It allows for better risk management and resource allocation within the financial sector. We have learned from past crises.

Our current actions will maintain financial stability, and we have carefully recalibrated the framework to encourage the use of securitisation without introducing excessive risk into the system.

Regarding the legislative changes we propose: first, the Securitisation Regulation will define product rules and conduct rules for issuers and investors; second, the Capital Requirements Regulation will establish capital requirements for banks involved in securitisation. We are enhancing the frameworks risk sensitivity.

We will also implement two Delegated Acts. The first is the Liquidity Coverage Ratio Delegated Act, which addresses the use of securitisation for liquidity buffers in banks. The second is Solvency II, which relates to enabling insurance companies—along with some pension funds—to participate more in this market and benefit from using the securitisation instrument effectively within our financial sector.

Essentially, we aim to revitalise this instrument. Its usage in Europe is significantly lower than in other regions, and we believe it can greatly assist in revitalising our markets.

This is the first legislative proposal stemming from the Savings and Investments Union Strategy. More will follow, but we believe this one will contribute significantly to the objectives of the Savings and Investments Union.