The European Commission has published the Capital Markets Union Action Plan

The Action Plan highlights the 16 different actions. IACPM has highlighted three that are relevant for credit portfolio managers.

Action 4:
The Commission will seek to remove regulatory obstacles for insurance companies to invest long-term, without harming financial stability and policyholder protection. It will also seek to provide for an appropriate prudential treatment of long-term SME equity investment by banks. Furthermore, it will assess possibilities of promoting market-making activities by banks and other financial firms.

Action 5:
The Commission will assess the merits and feasibility of introducing a requirement for banks to direct SMEs, whose credit application they have turned down, to providers of alternative funding.

Action 6:
In order to scale-up the securitisation market in the EU, the Commission will review the current regulatory framework for securitisation to enhance banks’ credit provision to EU companies, in particular SMEs.

In early September, the IACPM communicated to the EC its recommendations on regulatory obstacles on treatment of securitisations in Solvency II (Action 4), as well as on EC July 24 proposals on STS framework for synthetic securitisations (Action 6). The IACPM also contributed to a joint associations letter making proposals on NPL securitisations (Action 6).

The action plan published today does not provide details on the issues related to securitisations we raised in the above communications. On synthetic STS securitisations, the IACPM will continue to advocate for fair treatment of unfunded synthetic securitisations, appropriateness of the collateral, SRT and disclosure requirements, release of the back-up servicer requirement, as well as improvement of the amendment to Art 270 CRR.