The EBA published the final draft regulatory technical standards (RTS) on risk retention yesterday (12 April 2022), following its June 2021 consultation. While the EBA had previously published draft risk retention RTS in 2018, they had not been finalised and, as signposted by the European Supervisory Authorities (ESAs) in their May 2021 Joint Report on the Implementation and Functioning of the Securitisation Regulation, that delay created some market uncertainty and made it more difficult for the ESAs to carry out a meaningful assessment of how the Securitisation Regulation was working in practice.

The EBA’s mandate in respect of the risk retention RTS was subsequently expanded by the 2021 amendments to the Securitisation Regulation under the Capital Markets Recovery Package to bring:

  • risk retention in NPE securitisations, and
  • the impact of fees paid to the retainer on the effective material net economic interest,

into scope. The deadline for finalising those RTS was also extended to 10 October 2021.

The revised final draft RTS published yesterday are broadly similar to those set out in the EBA’s June 2021 consultation paper with some small amendments, and will now be considered by the European Commission.

We will be publishing more detailed analysis in the coming days on the revised final draft RTS. In the meantime, if you have any queries, please get in touch with your usual contact in our Debt Capital Markets team.