Market participants say large capital charges proposed for subordinated securitisation tranches in Solvency II would hurt the vehicles. "Who's going to invest the resources necessary to do sophisticated analysis to buy securitisations if they think they will be heavily penalised by capital charges?" said Steve Gandy of Santander Global Banking and Markets.
Jonathan Faull, a director general at the European Commission, requested that the European Insurance and Occupational Pensions Authority review Solvency II capital charges. AFME supports the request, having noted concerns with capital charges for securitisation.
Michel Barnier, the EU's internal-market commissioner, voiced support for an economic-growth pact, which would complement the region's austerity push. "I am advocating that we prepare a European growth initiative in addition to the agreements on budget discipline," Barnier told a German newspaper. He said the initiative would include "project bonds" to finance infrastructure, use of EU structural funds and increased funding for the European Investment Bank.
European finance ministers are set to meet Wednesday to discuss Basel III capital rules for banks. Officials have struggled to reach an agreement on the rules, which will force banks to come up with billions of euros in capital. Sweden is expected to stand its ground on the right to subject banks to tougher capital rules. The disagreement highlights a challenge facing Europe as its financial sector permeates national borders, while many rescue efforts fall on individual countries.