Securitisation & Covered Bonds: Complementary Instruments in Support of the EU’s Housing and Climate Priorities
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The European Mortgage Federation - European Covered Bond Council (EMF-ECBC) would like to underline the strategic link between well-functioning capital markets and housing solutions for European citizens, both of which are at the core of the political debate within the major European institutions and at national level. We fully support the initiatives aimed at equipping financial stakeholders and mortgage lenders with a broad and comprehensive portfolio of financial instruments, both on-balance-sheet and off-balance-sheet. The EMF-ECBC fully supports enhancements to well-functioning capital markets in order to strengthen financial stability and the real economy.
Securitisation and covered bonds are complementary tools and are both fundamental to the Union’s housing and climate agendas, where substantial private-sector investment is required. We are committed to supporting the current debate with concrete proposals, as outlined in the EMF-ECBC Concept Note on Affordable & Sustainable Housing. These two instruments are complementary in supporting competitiveness and ensuring a global level playing field, making the Single Market a financial benchmark for global institutional investors and channelling capital efficiently towards the EU’s housing and climate priorities.
The EMF-ECBC supports the current initiative to revitalise the securitisation market and has been following closely the evolution of the file throughout the ongoing legislative process. Priority should be given to ensuring that disclosure and reporting obligations are manageable and proportionate to the associated risks, while risk weights are recalibrated to align more closely with the actual risk profile of securitised tranches. The risk weights applied to date have had a prohibitive and unjustified effect.
At the same time, the EMF-ECBC endorses the current Council discussions calling for careful consideration of potential unintended consequences arising from the recalibration of securitisation, in particular on already well-functioning covered bond markets. Indeed, in order to ensure equal treatment for equivalent risk, we would like to emphasise the importance of adjusting the minimum risk weights for comparable financial instruments of equivalent credit quality.
Mobilising EU capital markets in support of the Union’s strategic priorities requires a risk-based approach and regulatory neutrality, ensuring appropriate, consistent, and proportionate treatment for all instruments. Such an approach fosters trust, efficiency, and sustainable growth in capital markets while supporting the EU’s housing and climate objectives.
Contact
Luca Bertalot Secretary General +32 2 285 40 35 |