EU Commission Proposals on the Securitisation Framework

On 17 June 2025, the European Commission adopted a package of measures with the aim of reviving the EU securitisation market.  The purpose for this initiative is two-fold, namely:

• to reduce undue operational costs for issuers and investors, balancing with adequate standards of transparency, investor protection and supervision; and
• to adjust the prudential framework for banks and insurers, to better account for actual risks and remove undue prudential costs when issuing and investing in securitisations, while at the same time safeguarding financial stability.

The review proposes to amend the following four legal acts:

• Regulation (EU) No 2017/2402 – the Securitisation Regulation,
• Regulation (EU) No 575/2013 – the CRR,
• Delegated Regulation (EU) 2015/61 – the Liquidity Coverage Ratio (LCR) Delegated Act, and
• Delegated Regulation (EU) 2015/35 – the Solvency II (SII) Delegated Act.

The two legal acts that relate directly to the prudential supervision of banks are the CRR and the LCR Delegated Regulation.  Specifically with respect to the CRR, the proposed amendments cover mainly two areas:

• The calibration of the two key parameters that set the level of non-neutrality, namely the risk weight floor for senior securitisation positions and the (p) factor; and
• The framework for significant risk transfer (SRT).  Under these new proposals, a new principles-based approach (PBA) will be introduced to replace the existing mechanical tests.

With respect to the LCR Delegated Act, the Commission is, amongst others, proposing to increase LCR eligibility for securitised assets, where this will extend beyond securitisations with AAA ratings.  Subject to dedicated criteria, ‘resilient’ STS (simple, transparent and standardised) securitisations that exceed a certain issue size will be granted a lower 15% haircut.  Moreover, the proposals aim to remove the 5-year cap of the average weighted life of the underlying asset, thus making securitisations with a longer-term maturity also eligible for the liquidity buffer.

Discussions are ongoing both at the EU Council and Parliamentary levels.

Regulatory Publications by the European Banking Authority

The EBA has published the following regulatory products, including technical standards and guidelines, since the latest publication of the Regulatory Update:

• On 28 May 2025 the EBA published the final technical package for version 4.1 of its reporting framework. This package supports the assessment and identification of significant crypto asset providers. It also supports the centralisation of institutions’ prudential disclosures in the EBA Pillar 3 data hub, which shall facilitate access and usability of this information to all users, including institutions. This package supports competent authorities in performing their supervisory duties regarding issuers’ compliance under the Markets in Crypto Assets Regulation (MiCAR). This framework has applied as of the second half of 2025.

• On 16 June 2025 the EBA published regulatory products on operational risk capital requirements and related supervisory reporting. These regulatory products, whose objective is that of fostering consistent and enhanced supervision, include the following Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS):
  • RTS concerning the calculation and adjustments of the Business Indicator (BI), which is central to the standardised and harmonised application of the operational risk capital requirements;
  • ITS on the mapping to FINREP, which will ensure consistency and reduce implementation, administrative and operational costs;
  • Amending ITS on operational risk reporting, which will keep the supervisory reporting framework relevant, meaningful and aligned with the amended regulation.

The first applicable reference date for reporting under the draft ITS is 31 March 2026.

• On 1 July 2025, the EBA published the final Guidelines on the treatment of Acquisition, Development and Construction (ADC) exposures to residential property under the CRR. The Guidelines specify the conditions under which institutions may apply a risk weight of 100% instead of 150% to ADC exposures that meet credit risk mitigating requirements.

• On 4 August 2025, the EBA published three final draft RTS that provide a taxonomy for operational risk losses and offer clarity on the exemptions for the calculation of the annual operational risk loss and on the adjustments to the loss data set that banks must perform when merging or acquiring entities or activities, namely:
  • RTS on establishing a risk taxonomy on operational risk which provides a list of operational risk event types, categories and attributes that institutions must use when recording operational risk loss events, in line with the current framework and the international standards.
  • RTS on the conditions under which it would be unduly burdensome for an institution to calculate the annual operational risk loss which recognises cases when it would be disproportionate for an institution to promptly calculate the annual operational risk loss. In such cases, the RTS allow for a temporary waiver from the requirement to calculate the annual operational risk loss.
  • RTS on the adjustments to an institution’s loss data set following the inclusion of losses from merged or acquired entities or activities. These technical standards provide indications on the currency and the risk taxonomy to be used when incorporating the loss data set of merged entities or activities, and provide guidance on how to calculate the annual operational risk loss when data on historical losses are not available.
• On 5 August 2025 the EBA published its final draft RTS which specify the technical elements necessary for institutions to calculate and aggregate crypto-asset exposures in relation to the prudential treatment of such exposures under the CRR. The RTS address implementation aspects and will ensure harmonisation of the capital requirements on crypto-asset exposures by institutions across the EU.

• On 6 August 2025 the EBA published its final draft RTS specifying what constitutes an “equivalent legal mechanism” for unfinished property exposures under the standardised approach for credit risk under the CRR. The RTS specify the conditions that a legal mechanism should meet in order to recognise a property under construction in the own fund requirements calculation under the Standardised Approach for credit risk, by defining strict requirements for the protection provider and the guarantee terms. Against this background, the final RTS replace the narrower approach consulted on with a broader one that recognises existing national completion guarantee schemes in certain Member States, subject to harmonised safeguards such as minimum creditworthiness (20% risk weight cap) and enforceability conditions.

• On 8 August 2025 the EBA published its final draft ITS, amending the Implementing Regulation on the benchmarking of credit and market risk for the 2026 exercise. The most significant change is in the area of market risk, where the EBA proposes to restrict the data collection to the information on the alternative standardised approach (ASA) to be provided by those banks that were granted the internal model approval. In the area of credit risk, the EBA suggests only minor changes.

• On 18 August 2025 the EBA published its final draft RTS on the allocation of off-balance sheet items and the specification of factors that might constrain institutions’ ability to cancel unconditionally cancellable commitments. Under the standardised approach of credit risk, the exposure values of off-balance exposure depend on the application of certain percentages, which in turn rely on a bucket classification. With these draft RTS the EBA introduces assignment criteria for off-balance sheet items not already assigned to any buckets in line with Annex I of the CRR. These assignment criteria aim at distinguishing between different levels of conversion probability, leveraging on the existence of financial covenants, conditions related to non-credit related events, and the optionality the obligor has in drawing or not the off-balance sheet item. Furthermore, the EBA provided a non-exhaustive list of examples to support institutions in classifying their off-balance sheet items. The final draft RTS also introduce four factors to be considered as constraining institutions’ ability to cancel an unconditionally cancellable commitment that relate to risk management processes, commercial considerations as well as to reputational and litigation risks. Finally, the EBA is implementing the notification process of off-balance sheet items not already included in Annex I via the COREP framework to minimise the reporting burden.

Credit institutions are reminded that while technical standards enter into force following their publication in the Official Journal of the EU, they are expected to take note of these developments and prepare for their implementation.

In relation to the Guidelines published on 1 July 2025, the Authority intends to implement them into banking rules, however credit institutions are expected to take note of the conditions stipulated in the Guidelines to meet the credit risk-mitigating requirements.

Credit institutions are encouraged to continuously follow developments at EBA level and participate in public consultations to provide their views and stances on regulatory products.

European Central Bank’s Amendment of the FINREP Regulation

On 9 September 2025 the Governing Council of the ECB adopted an amendment to Regulation (EU) 2015/534 on reporting of supervisory financial information, including its annexes to incorporate additional data points into the ECB FINREP data point reporting framework. These data points are intended to further support the supervisory assessment of credit risk as part of the supervisory review and evaluation process (SREP) for institutions. This amendment will be published in the Official Journal and will be applicable to the LSIs under the FINREP data point reporting framework with a first reporting reference date of December 2025.

Sustainable Finance

EBA Climate Risk Indicators

On 25 April 2025, the EBA published a set of key indicators on climate risk in the EU/EEA banking sector, drawing on Pillar-3 ESG disclosures for reference dates 31 December 2023 and 30 June 2024. The indicators, presented in a public dashboard, show that a significant share of banks’ exposures remain concentrated in sectors with high transition risk, while exposures to assets subject to high physical climate risk are lower. The data also reveal that the average Green Asset Ratio remains low across institutions and jurisdictions and highlights persistent data-quality and consistency challenges. The EBA plans regular updates to the dashboard and will refine the indicators as Pillar-3 templates evolve.

EBA No-Action Letter and Updated ESG Dashboard

On 6 August 2025, the EBA issued a no-action letter addressing uncertainties in the application of the ESG Pillar-3 disclosure requirements and simultaneously released an updated ESG risk dashboard with data as at December 2024. The letter recommends that national competent authorities temporarily deprioritise enforcement of certain templates and columns until the amendments to the Implementing Technical Standards are finalised. Although the measure does not alter underlying legal obligations, it signals supervisory forbearance and provides banks additional time to adapt to forthcoming revisions to the disclosure framework.

Basel Committee Voluntary Climate Disclosure Framework

The Basel Committee on Banking Supervision published, on 13 June 2025, a voluntary framework for the disclosure of climate-related financial risks. The framework sets out qualitative and quantitative recommendations designed to enhance transparency around banks’ exposures to climate risk while recognising the evolving nature of climate data and the need for flexibility across jurisdictions. The Committee will monitor developments, including the implementation of other reporting frameworks, and consider whether any revisions to the framework are warranted in the future.