Financial Markets & Investor Protection
EU securitisation review: provisional agreement improves the framework, but implementation will be key
Published on 26 October 2026
A provisional political agreement on the EU Securitisation Review brings several improvements sought by the banking sector, including better capital treatment for STS securitisations, lower p-factors and a more workable approach to third-country transactions.
For the ABBL, the outcome is an important step towards a securitisation framework that can better support bank funding diversification, credit availability and deeper European capital markets. Attention must now turn to the remaining technical and implementation issues to ensure these benefits materialise in practice.
Summary
The fourth trilogue on the EU Securitisation Review, held in Strasbourg on 21 October 2026, resulted in a provisional agreement ad referendum on all outstanding political issues relating to the Capital Requirements Regulation (CRR) and the Securitisation Regulation.
For the ABBL, the agreement represents a meaningful improvement compared with the European Commission’s original proposal. Several elements move the framework towards a more proportionate and workable regime, while preserving safeguards and supporting the competitiveness of European banks.
A more supportive framework for financing the European economy
The ABBL particularly welcomes the improved capital treatment for Simple, Transparent and Standardised (STS) securitisations, the preservation of the existing hierarchy of carve-outs, the return to a formula-based approach under ERBA and the significant reduction in p-factors.
The agreement also delivers a more favourable Net Stable Funding Ratio treatment for STS securitisations and removes unnecessary regulatory burdens for third-country transactions.
Taken together, these changes matter beyond the securitisation market itself. A more effective framework can help banks diversify their funding sources, free up balance-sheet capacity and support the flow of credit to households and businesses. It can also contribute to the broader objective of mobilising private capital and strengthening Europe’s capital markets.
This is particularly relevant at a time when Europe needs to finance major investment needs while making better use of the savings already available within the EU.
Key outcomes of the provisional agreement
The agreement covers a broad range of prudential, supervisory and market-access issues.
Capital treatment
- Resilient STS securitisations: risk weight reduced to 5%, instead of 6%.
- Non-resilient STS securitisations: risk weight reduced to 7%, instead of 8%.
- Non-resilient STS scalar under IRBA: reduced to 8%, instead of 9%.
- Caps: no caps introduced. The project-finance issue remains under consideration, with the Commission intending to address it through the specialised-lending framework.
Carve-outs and ERBA
- The existing hierarchy of carve-outs is preserved, with a fixed formula and a 5% floor.
- No extension to non-STS securitisations.
- The extension to SEC-SA and IRBA is maintained, subject to the credit-enhancement insurance-wrapper condition, which is also extended to the general carve-out.
- ERBA returns to a formula-based approach.
P-factors, CCF and Ka
- The Council position on p-factors has been adopted; the reduction remains significant.
- The Commission intends to address the output-floor issue in the context of the Banking Package.
- The return to a 0% unwritten credit conversion factor (UCC) remains unresolved. The Commissioner has committed to addressing it through the Banking Package, without an EBA mandate.
- The Council position on Ka has been adopted.
Liquidity and structural issues
- NSFR: secured for STS securitisations, moving from 100% to 185%.
- UFCP: resilience criteria secured in line with the Commission’s proposal; thresholds were not discussed.
- STS without an SSPE: not agreed, but subject to a review clause.
- Grandfathering: no grandfathering clause included.
Supervision, sanctions and market access
- Supervision: agreement based on an enhanced version of the Commission’s Option 1. ESMA will take direct responsibility for authorising and withdrawing authorisations of third-party verifiers (TPVs). The EBA-led Joint Committee will conduct risk-based annual sample reviews of transactions to assess STS compliance, feeding into an annual report. A review clause applies.
- Sanctions: the Presidency compromise has been adopted, subject to further technical work. It avoids duplication and preserves proportionality.
- Third-country transactions: the Presidency compromise has been adopted, removing unnecessary regulatory burdens and supporting the international competitiveness of European banks. The identified loophole is expected to be addressed in technical discussions.
- Public securitisation: the Presidency compromise has been adopted; no new definition introduced, with ad hoc reporting requirements for CLOs.
- UCITS: a 25% threshold, subject to a review clause.
The political agreement remains subject to the completion of technical work on the legal texts. These discussions are expected to focus primarily on final drafting and clarification rather than reopening the overall political balance reached in the trilogue.
Important issues still require follow-up
While the overall direction is encouraging, the ABBL considers that several issues will require close attention as the framework moves towards implementation.
These include the treatment of project finance, the unresolved question of the 0% unwritten credit conversion factor, the interaction with the output floor and the practical design of the new supervisory arrangements.
The effectiveness of the reform will depend not only on the final legal wording, but also on avoiding unnecessary complexity, duplication and unintended constraints when the rules are applied.
In particular, supervisory arrangements will need to remain proportionate and operationally workable. Under the provisional agreement, ESMA would take direct responsibility for authorising and withdrawing authorisations of third-party verifiers, while the EBA-led Joint Committee would conduct annual risk-based sample reviews of transactions to assess STS compliance.
Ensuring that these layers of supervision work together efficiently will be essential to preventing duplication and preserving legal certainty for market participants.
ABBL working group to assess the practical impact
The ABBL’s Capital Markets Funding & Securitisation Working Group will now examine the provisional agreement in detail and assess its practical implications for Luxembourg banks and the wider securitisation value chain.
The Working Group will also monitor the remaining technical discussions and identify implementation issues that may need to be raised with Luxembourg authorities, European institutions and industry partners.
This follow-up will help ensure that the final framework remains practicable, proportionate and supportive of a competitive European securitisation market.
The ABBL will continue to engage on the outstanding issues as the legal texts are finalised, drawing on the expertise and market experience of its members.
Members are invited to share preliminary observations, concerns or questions with the ABBL Secretariat so that these can feed into the next phase of the association’s work.
Marilyn Rinck
Head of Banking Supervision, Financial Markets & ESG
Published on 26 October 2026