Andrew Traynor
Partner
Ireland
The trilogue on the EU securitisation package has successfully concluded under the Irish Presidency of the Council of the EU with political agreement being reached between the Council and the European Parliament on 21 October 2026 to revise and simplify the EU's securitisation regime - a remarkable feat given how far apart the co-legislators were on some of the issues at the outset.
The political agreement reached this week marks a significant positive development for the EU securitisation market. It includes more risk-sensitive capital treatment, a strengthened STS framework, reduced administrative requirements and other measures to broaden institutional investor participation which should all help create a more attractive environment for a variety of securitisation activity in Europe.
The deal strikes a good balance between ambition and financial stability, making the framework more effective and future-proof.
The potential benefits for issuers are particularly meaningful. Risk-weight floors for senior STS positions could fall to 5 - 7% where the new 'resilient' criteria are met, improving the economics of securitisation as a capital and balance sheet management tool. Combined with a lighter administrative burden and a broader investor base, the reforms have the potential to support increased issuance and market activity across the entire European securitisation market.
Just as importantly, the political narrative around securitisation continues to evolve in a constructive way, moving away from viewing the market primarily through a prudential lens with the reforms expressly recognising securitisation's role in supporting the real economy by freeing up bank capital, supporting greater lending to households, SMEs and infrastructure and defence and ultimately advancing the EU’s broader competitiveness objectives.
While the detailed legal texts for amendments to the EU Securitisation Regulation and CRR still need to be finalised and formally adopted by the Council and European Parliament, the direction of travel is clear and this represents an important step towards a deeper, more efficient and more competitive European securitisation market. It is a very welcome development and a major win for the broader Savings and Investment Union initiative.
