Capital cut for synthetic securitisations splits regulators
European rulemakers wary of diverging from Basel standards
European regulators are divided on easing capital charges for balance sheet synthetic securitisations that earn the label ‘simple, transparent and standardised’ (STS), market sources reveal.
Since 2019, true sale securitisations have been able to qualify for the STS label. In a draft report published on September 24, the European Banking Authority now proposes to extend the label to balance sheet synthetic securitisations. These are used by banks to transfer the credit risk of a portfolio of
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