The Basel Committee on Banking Supervision today published an updated standard for the regulatory capital treatment of securitisation exposures. By including the regulatory capital treatment for “simple, transparent and comparable” (STC) securitisations, this standard amends the Committee’s 2014 capital standards for securitisations.
The capital treatment for STC securitisations builds on the 2015 STC criteria published by the Basel Committee and the International Organization of Securities Commissions. The standard published today sets out additional criteria for differentiating the capital treatment of STC securitisations from that of other securitisation transactions. The additional criteria, for example, exclude transactions in which the standardised risk weights for the underlying assets exceed certain levels. This ensures that securitisations with higher-risk underlying exposures do not qualify for the same capital treatment as STC-compliant transactions.
Compliance with the expanded set of STC criteria should provide additional confidence in the performance of the transactions, and thereby warrants a modest reduction in minimum capital requirements for STC securitisations. The Committee consulted in November 2015 on a proposed treatment of STC securitisations. Compared to the consultative version, the final standard has scaled down the risk weights for STC securitisation exposures, and has reduced the risk weight floor for senior exposures from 15% to 10%.
The Committee is currently reviewing similar issues related to short-term STC securitisations. It expects to consult on criteria and the regulatory capital treatment of such exposures around year-end.
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Sign me up for the newsletter!
Notify me of follow-up comments by email.
Notify me of new posts by email.
Philips India launches CSR campaign ‘HarSaansMeinZindagi’ to promote awareness on Childhood Pneumonia in India
BACKSTREET BOYS PERFORM AT THE VENETIAN MACAO AS PART OF THEIR BIGGEST ARENA TOUR IN 18 YEARS
Huawei Ships 200 Million Smartphone Units For 2019 In Record Time
Titan Eyeplus forays into Smart eyewear with Skyfly Mutrics Smart Eyewear
The Do’s and Don’ts of Social Automation as a Mode of Getting Real Instagram Followers
2014 The Global Indian New Network (TGINN)