EBA Responds to Query on Originator Structures in European CLOs

September 17, 2019

David Quirolo comments on the European Banking Authority’s response to a key question concerning originator structures under the new Securitisation Regulation: “What are the obligations of an originator who purchases third party’s exposures and subsequently securitizes them, in order to meet the requirements set out in Article 9 of the Securitisation Regulation?”

An excerpt from “EBA Responds to Query on Originator Structures in European CLOs,” Bloomberg Law, September 17, 2019:

David Quirolo, partner at Cadwalader, Wickersham and Taft, explained that the EBA’s response doesn’t provide any specific guidance to the CLO market on this issue, but it does provide a way through for the market. "The EBA advises participants to look at market practice, use adequate resources and make reasonable efforts to determine what is appropriate for the type of asset being originated." 

Assuming there is a European bank in a loan arranger group then that loan should have been created using the same sound credit granting standards for banks under the CRR Regulation, so that at least part of the verification requirement under Article 9 can be met this way, Quirolo says.

To read the Bloomberg Law article, which requires a subscription, click here.

 

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