Securitisations are a key instrument for European banks and, in our country, also thanks to the Guarantee on Securitisation of Non-performing Loans (GACS), have contributed strongly to the reduction of the stock of impaired loans in Italian banks. A similar instrument was introduced in Greece with positive results.
Recently, the governments of some European countries, including Italy, Germany and France, would like to promote a ‘revitalisation’ of this instrument. In a joint letter sent to the European Commission, the three directors-general of the Treasury proposed two main actions: a revision of capital requirements for banks and the creation of an ‘EU guarantee scheme’ for securitisations.
This European guarantee, similar to the Italian GACS model, would aim to facilitate access to private financing, channelling it towards projects of common interest, such as green and digital transition. This would be an important step to improve the standardisation of financial instruments, reducing transaction costs and increasing market transparency. Furthermore, the introduction of this guarantee could reduce the risk perceived by investors, encouraging a greater flow of capital to this instrument.
According to the European Union Competitiveness Report, coordinated by Mario Draghi, the securitisation sector in the European Union still lags behind that of the United States, where this instrument has been widely used also thanks to the presence of state agencies such as Fannie Mae and Freddie Mac.
In 2022, securitisation issuance in the EU accounted for only 0.3% of GDP, compared to 4% in the US. This gap, as the report points out, is attributable to stricter prudential rules in Europe and the absence of state structures capable of supporting the market. By maintaining appropriate regulation, securitisation could make a contribution to :
- Making banks’ balance sheets more flexible: allowing them to transfer part of the risk to investors, freeing up capital for new loans.
- Supporting the development of capital markets: attracting investments not only from within the EU, but also from international investors.
- Financing the green and digital transition: by using private capital for large-scale projects that are necessary for Europe’s future.
The Need for Appropriate Regulation The experience of 2007-2008 showed how important it is to maintain strict control over securitisation. The European institutions are also aware of the need to avoid past mistakes, such as those made by US agencies that contributed to the crisis. For this reason, the proposal for an EU guarantee aims not only to incentivise the use of securitisations, but also to strengthen supervision and ensure greater transparency in the process. The European Commission will now have to evaluate the proposals made by the three countries and decide how to implement a regulatory framework that can maximise the benefits of securitisation without compromising financial stability. The challenge will be to create a balance between promoting a more dynamic securitisation market and protecting the European financial system from new systemic risks.
