The European Banking Authority (EBA) has published its final draft Regulatory Technical Standards (RTS) specifying which underlying exposures for on-balance-sheet securitisations are deemed to be homogenous as part of the STS simplicity requirements. This new draft RTS extends the scope of the existing RTS on homogeneity for non-ABCP and ABCP securitisation to establish the same conditions for the homogeneity of the assets for all types of securitisations. The new RTS clarifies that for on-balance-sheet securitisations, homogeneous exposures need to:

• Undergo similar underwriting standards and similar servicing procedures;
• Fall within the same asset category; and
• Be assessed with reference to at least one of the homogeneity factors, such as type of obligor, ranking of security rights, jurisdiction, or type of immovable property.

Regarding the asset category of “credit facilities, including loans and leases, provided to any type of enterprise or corporation”, this new RTS maintain the existing requirements, which differentiate between SME and non-SME corporate obligors. However, the new RTS does not introduce a definition of SME and it is therefore expected that the assignment of an exposure to this asset category should be based on the internal classification of the originator.

The RTS include transitional provisions to ensure that existing transactions will continue to remain STS compliant. These final draft RTS will be submitted to the Commission for endorsement, after which they will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union. It will enter into force 20 days after publication.

For more information, please contact Guillermo Pérez Molina, Private Credit Associate.