European households hold €10 trillion in low-yield savings accounts while companies starve for capital. The EU wants securitisation to bridge that gap. One number in the trilogue will decide whether it does.
Securitisation—the technique of bundling bank loans into packages and selling them to investors—became toxic shorthand for the 2008 financial crisis, when US banks packaged subprime mortgages into securities that collapsed as borrowers defaulted. Now Brussels is betting on it as a core pillar of the Savings and Investments Union (SIU).
Only 1.9 per cent of outstanding EU loans are securitised, compared to 7 per cent in the US. Securitisation allows banks to free up capital tied to existing loans and redeploy it as new lending, multiplying the economy’s access to credit. Whether the EU unlocks that potential depends almost entirely on one number buried in the trilogue: the capital floor, which determines how much capital a bank must hold against the safest slice of a securitised package.
The plane that has to land
The Council of the EU’s position recalibrates capital requirements in a risk-sensitive manner. It raises the UCITS investment limit in a single public securitisation from 10 per cent to 50 per cent, and allows third-party verifiers for STS compliance to reduce administrative burdens. By most analyst accounts, it makes a fair dent.
Gonzalo Gasos, Senior Director of Prudential Policy and Supervision at the European Banking Federation, recognises the efforts made but warns that the current proposals do not go far enough. “The objective is not to securitise a little bit more. You really need a game changer in order to mobilise big masses of funds.” At present, this proposal is not that.
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If you make only half the way and sink in the ocean, that’s a failure. You need to arrive at your destination.
— Gonzalo Gasos, Senior Director of Prudential Policy and Supervision, European Banking Federation
“It’s like a plane flying from Europe to the US—if you make only half the way and sink in the ocean, that’s a failure, even if you did 2,000 kilometres. You need to arrive at your destination,” he said.
Arriving at the destination will require lower risk weight floors across all transactions. In particular, the minimum capital floor for STS-resilient transactions needs to come down to between 2 and 3 per cent, a figure that contrasts sharply with the Commission and Council proposals, which sit at 5–6 per cent. “With 5 or 6 per cent for the minimum floor, there will be no big mobilisation of low-risk mortgages, which make the biggest portfolio in European banks,” said Mr Gasos.
Parliament rapporteur Ralf Seekatz has proposed a 4 per cent floor for the highest-quality securitisations, more ambitious than the Council’s 6 per cent but still short of the 2–3 per cent the industry considers the minimum for real impact.
Supply before demand
The Commission’s proposal focuses heavily on the demand side, broadening the investor pool and removing deterrents. Necessary, Mr Gasos argues, but secondary. “If the supply side doesn’t work, there’s nothing else to look at,” he said.
The supply-side case centres on mortgages. One quarter of European bank balance sheets are made up of mortgages, and low loan-to-value mortgages originated in Europe are among the safest assets a bank can hold. Securitising them would free up capital for new lending, without taking on more risk. “The capital is like the factory of the bank. More risk-sensitive capital requirements permits higher velocity of rotation in your stock,” he said.
Instead of holding a mortgage for 30 years, a bank cycles that capital in ten, five, or two. More lending, same risk. “You increase the velocity, but not the risk.”
The Association for Financial Markets in Europe has been equally blunt, warning that the Council’s floor lacks the risk sensitivity needed to boost banks’ lending capacity and that credit risk transfer will remain constrained for asset classes such as residential mortgages, infrastructure, and corporate loans.
“Peripheral, not transformative”
Rebecca Christie, Senior Fellow at Bruegel, views the package positively but sees it as peripheral to what Europe’s competitiveness really needs. “Securitisation as currently proposed is a peripheral measure. It’s not going to unlock capital markets, it’s not going to jumpstart the economy…it will possibly free up some capital for lending without creating undue risk, and it shows that market issues are back on the table,” she said.
The Market Integration Package, due from the Commission later this year, is where the structural work on Europe’s fragmented capital markets will actually happen. “The EU’s current securitisation proposal is on a wholly separate track than capital markets union initiatives like the Market Integration Package,” Ms Christie said.
Without the right outcome in the trilogue, even that narrower ambition fails. But even with it, Europe’s deeper problem — the fragmentation of its capital markets — remains unsolved, Ms Christie argues. “Solving the fragmentation problem is what has to happen,” Ms Christie said. ING’s assessment suggests the market will not see meaningful benefits even in 2026 if a deal is struck; the real impact, if it comes, will be felt in the years that follow.
The stakes of getting it wrong
“This whole thing is incremental. If they do it correctly, it will have a good incremental impact. If they do it badly, it will have a bad incremental impact,” Ms Christie said.
Not everyone agrees the direction of travel is right. The ECB, while broadly supportive, has warned that large synthetic securitisation volumes could create procyclicality: in a downturn, simultaneous exits could amplify instability rather than absorb it. Yet in January 2026, it launched a fast-track process cutting securitisation approval times from three months to eight working days, suggesting supervisors already have the tools to monitor risk at scale.
The floor number carries risk in both directions. Too high, and the reform never lands. Too low without adequate safeguards, and the ECB’s concerns become live. That balance is what the trilogue has to strike before the end of 2026.
The reform can really bear fruit in one or two years. But only if the conditions are right.
— Gonzalo Gasos, European Banking Federation
For Mr Gasos, the window is open but not permanent. Securitisation revival has been on the EU agenda since the ECB and Bank of England examined its potential benefits back in 2014. A decade on, little has changed. “The reform can really bear fruit in one or two years. But only if the conditions are right,” he said. The trilogue will decide whether they are.
