EU Securitisation Market: Maltese Presidency secures second agreement on Capital Market Union in a single day

Today, 30 May 2017, the Maltese Presidency of the Council of the EU reached a landmark agreement with the European Parliament 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 Market 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 is the second agreement within the span of a few hours contributing to the development of an EU Capital Market Union which has been reached by the Maltese Presidency with its partners in the European Parliament. The agreement comes after a series of difficult negotiations over the past few months. Combined with the today’s previous agreement on easing investment in EU businesses, it fulfils yet another promise made by the Maltese Presidency at the outset of its semester, being to significantly contribute to the development of the Capital Market Union.

“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. "Tonight's agreement with MEPs will allow us to relaunch the securitisation market, defining a model for simple, transparent and standardised securitisations."

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.

Today’s agreement is intended to provide a boost for the EU’s securitisation market by providing clear and transparent rules which also minimise risks, thus allowing for EU citizens and entrepreneurs to benefit from secure and accessible loans.

The agreement will now be submitted for confirmation by both the Council of the EU and the European Parliament.