Brussels, 14/06/2016 (Agence Europe) - The public hearing held at the European Parliament on Monday 13 June to discuss securitisation further convinced the rapporteur on the Commission's proposal to revitalise this market, Paul Tang of the Netherlands (S&D), of the need for MEPs to avoid being rushed into an agreement.
“I'm concerned with all the differences” expressed at the public hearing, which was attended by the NGO Finance Watch, the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and representatives of the academic world and the banking industry, the Dutch MEP explained.
Listening to all of the positions shared, he wondered “how the Council managed to agree in seven weeks”, he said. Pablo Zalba Bidegain (EPP, Spain), who is also a rapporteur on one of the Commission's two legislative proposals on securitisation, said that securitisation had worked well in the EU. This interpretation is confirmed by the figures provided by the commissioner for financial services, Jonathan Hill: at the peak of the crisis, the default rate on securitised European products was 0.1%, compared to 16% in the United States. These figures were welcomed by Ashley Fox MEP (ECR, UK).
The Secretary General of Finance Watch, Christophe Nijdam, played down the conclusions to be drawn from these figures. Although the default rate was low, the prices of the products fell by 80% in some cases. Tang asked whether synthetic securitisation should be excluded. This refers to operations in the framework of which banks make use of credit derivatives so that they can transfer only the credit risk of the basket of assets, and not the assets themselves, to third parties. Finance Watch is calling for it to be excluded from the Commission's simple, transparent and standardised securitisation (STS). The Council's text paves the way for such a label for synthetic products.
Verena Ross, the Director General of the ESMA, said that the question of the certification of this STS label is a difficult one. A system based on self-certification has its advantages, but also its issues. If it is a third party, should it be public? At national level or at EU level? If we opt for a national approach, we will need a strong convergence, she said.
Finance Watch is calling for a public entity and is absolutely opposed to it being a credit rating agency. In the best-case scenario, it would be up to investors to carry out their own due diligence, so that they take responsibility and act like long-term investors.
In his draft report, Tang also adopted the position of Finance Watch in favour of keeping at least 20% of the risk on the balance sheet of the issuer, as opposed to 5% under the Commission's proposal. (Original version in French by Elodie Lamer)