How the 2025 EU securitisation reform drives growth and efficiency

The EU’s securitisation market is getting a long-awaited overhaul. On June 17, 2025, the European Commission introduced targeted reforms aimed at lowering capital costs, improving liquidity treatment, and streamlining compliance, particularly for STS (simple, transparent, and standardised) securitisations. For banks, insurers, and corporates, this reform marks a pivotal opportunity to unlock capital, modernise legacy platforms, and strengthen liquidity strategies.

For finance executives, particularly those focused on treasury operations, robust liquidity management, and regulatory compliance, these changes present a unique opportunity to refine processes, strengthen working capital optimisation, and leverage digital solutions to maximise the benefits offered by the evolving regulations.

2025 EU securitisation reform at a glance

The 2025 EU securitisation reform package introduces targeted measures to revitalise securitisation activities across Europe, with the dual objective of improving market confidence and addressing stagnation in securitisation volumes. These adjustments aim to align regulatory frameworks with market realities, remove deterrents to securitisation, and support banks' roles as originators and investors. Key elements of the reform include:

Lower capital charges

One of the most significant changes involves a reduction in regulatory capital requirements:

• The current capital floor of 10% for senior tranches of STS securitisations will become risk-sensitive. For a new category of “resilient securitisations” that meet STS and have a minimum credit enhancement, the floor could drop to 5%.

• The p-factor in the standardised capital approach (SEC-SA) will be reduced for senior STS tranches, lowering capital requirements and making securitisation more attractive for banks.

Improved liquidity coverage ratio (LCR) treatment

A larger pool of securitised assets, both scope and volume, will qualify as liquid assets under LCR, increasing their attractiveness for banks’ short-term liquidity management.

Simplified private securitisation reporting

The reform reduces reporting obligations for private securitisations and simplifies due diligence requirements for EU investors.

Contextualising the EU reform on securitisation

The current EU securitisation framework, established under Regulations (EU) 2017/2401 and 2017/2402, sought to rebuild market confidence in the wake of the 2008 financial crisis. It includes a 5% retention requirement for originators; stricter prudential treatment of asset-backed securities (ABS); and clear criteria for eligible assets and STS labelling to benefit from preferential capital treatment.

Despite these efforts, securitisation volumes in Europe have stagnated since the rollout of the regulations in 2019, especially when compared to the US. In 2024, calls for reform from both former Italian prime minister Enrico Letta and former European Central Bank (ECB) president Mario Draghi led the European Council to act. During a public consultation, stakeholders overwhelmingly requested clearer definitions; eased transparency and due diligence burdens; lower capital requirements; and improved treatment for insurers and pension funds.

Immediate benefits and digital transformation for banks

Banks stand to gain the most immediate benefits from the EU reform on securitisation, with streamlined processes and reduced costs enabling them to scale their securitisation activities. Additionally, the reform encourages digital transformation within banking institutions as they modernise legacy securitisation platforms. Though non-bank originators may not see immediate gains, the evolving legislative landscape holds promise for broader sector opportunities in the future.

Leveraging technology for working capital optimisation

The evolving securitisation landscape demands innovative tools and strategies to meet regulatory requirements while optimising working capital. By leveraging technological solutions, firms can ensure they remain agile, compliant, and positioned to thrive in this new regulatory environment.

Regulatory-ready structuring

Modern platforms enable corporates and banks to structure receivables pools eligible for STS or private securitisation, aligning with evolving EU regulations and prudential frameworks (e.g., liquidity coverage ratio [LCR] eligibility and Solvency II reforms).

Real-time visibility on eligible assets

With advanced data aggregation and analytics, today’s leading solutions provide real-time insights into the quality, diversification, and credit performance of receivables—essential for rating, credit enhancement, and compliance.

Multi-stakeholder orchestration (corporates, banks, investors)

Integrated technology acts as a bridge between corporates, originator banks, and investors, facilitating bilateral private deals or programmatic securitisation—streamlining reporting, onboarding, and documentation workflows.

Integrated compliance and reporting automation

Specialised platforms simplify private deal reporting (e.g., ESMA, private investors) with automated generation of loan-level data, STS compliance templates, and due diligence documentation.

Modular deployment for receivables, supplier finance, and securitisation

Whether companies start with supplier finance, receivables finance, or go straight to securitisation, unified platforms support seamless evolution with one platform and unified risk/credit monitoring.

Adapt to EU reforms with robust liquidity management solutions

The 2025 EU legislative reform on securitisation opens the door to renewed growth and efficiency in Europe’s capital markets. By lowering capital requirements, improving liquidity treatment, and streamlining compliance, the reform sets the stage for a stronger securitisation ecosystem.

To fully capitalise on these changes, banks and corporates need innovative technologies for real-time visibility, regulatory-ready structuring, and robust liquidity management.

As the EU reforms reshape capital markets, finance leaders must respond with systems that are both compliant and intelligent. Kyriba helps bridge this gap, delivering regulatory-ready solutions that empower banks and corporates to thrive in the new securitisation landscape.