Securitisation

What the EU is doing and why

Securitisation involves the pooling of loans and debt held by banks and financial institutions, which are packaged into products that investors can buy. It allows banks to free up capital for new loans to households and businesses, while also enabling credit risk‑sharing beyond the banking system.

The securitisation framework came into application in 2019 as part of the capital markets union action plan. Following the shock of the 2008 global financial crisis, the framework’s general objective was to ensure safe market practices and stimulate increased European securitisation, without creating risks to financial stability. The framework consists of

• the Securitisation Regulation that introduces common rules on due diligence, risk retention and transparency for all securitisations and creates a category of simple, transparent and standardised (STS) securitisation products
• a securitisation‑specific chapter of the Capital Requirements Regulation (CRR) that makes the capital treatment of securitisations for banks more risk‑sensitive and introduces a specific preferential treatment for STS securitisations
• the Liquidity Coverage Ratio (LCR) Delegated Regulation, which sets out the amount of liquid assets that a bank must have to meet its short‑term liquidity needs
• the prudential rules concerning insurer’s investments in securitisation set out in the Solvency II directive and the amended Commission Delegated Regulation (EU) 2015/35

Report from Enrico Letta and report from Mario Draghi recommended securitisation as a means of strengthening banks’ lending capacity for financing EU priorities including building the savings and investments union and increasing the EU’s competitiveness.

In June 2025, as the first legislative initiative under the savings and investment union, the European Commission adopted a package of measures simpler and more fit for purpose. The proposal was based on a thorough evaluation, impact assessment, and extensive consultation. It proposes amendments to the Securitisation Regulation to simplify certain requirements and reduce high operational costs. Amendments are also proposed to the Capital Requirements Regulation to introduce more risk sensitivity in the prudential framework for banks issuing securitisations. Draft amendments to the LCR and Solvency II Delegated Regulations will be finalised in due course.

Relevant legislation