ECB’s brake on relaxing the rules for securitizations

The European Central Bank is distancing itself from the European Commission regarding securitizations.
The European Central Bank (ECB) seems to be distancing itself from the European Commission on the issue of securitizations, estimating that the new regulatory framework being proposed is excessively flexible, resulting in increased risks.
It is noted that the process of securitization, that is, the conversion of all kinds of bank claims, such as non-performing loans, into bonds which are then sold to investors, was the “ground” on which the major crisis of 2008 erupted. In our case, securitizations have been the main tool for the “creation of HERACLES,” which contributed to solving the problem of non-performing loans for Greek banks.
Through its supervisory arm, the SSM, the ECB made it clear that the European Commission is overstepping its bounds by relaxing the securitization rules for banks, particularly for more complex and potentially riskier transactions.
It is recalled that the European Commission proposed in June the simplification of the rules governing securitization, in an effort to free up capital for lending and help Europe compete economically with the United States. The changes proposed by the Commission include that investors will no longer need to verify on their part whether the bank issuing the securitized bonds meets all necessary conditions.
However, the ECB, which supervises the largest banks in the eurozone, argues that some of the proposed changes increase risks.
In a speech, SSM official Pedro Machado warned that the practice of securitization carries inherent risks for financial stability, which are more difficult to identify in more complex securitization structures, adding that there is no inherent link between securitization and additional lending. He also stated that, although the securitization market is smaller in Europe than in the United States, this does not reflect the rapid growth of synthetic securitizations in the EU.
Machado warned against promoting “complex securitizations and opaque structures” and stated that the new rules should support “simpler, more standardized, and more resilient transactions.” (30/10/25)
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