The Bank of Italy updates the rules relating to the notification of securitisation transactions

On 12 March 2024, (i) the 45^th update of Circular No. 285/2013 (“Banks’ Supervisory Provisions”) ("Circular 285") was published, amending Chapter 6 of Part Two of Circular 285 (relating to provisions on securitisation transactions); and (ii) the 6^th update of Circular No. 288/2015 (“Financial Intermediaries’ Supervisory Provisions”) ("Circular 288") was published, amending Chapter 8 of Title IV of Circular 288 (also relating to provisions on securitisation transactions).

The amendments to such chapters implement – as the case may be – the new European rules on securitisation transactions introduced by EU Regulation 2402/2017 (the "SECR"), which have been implemented in Italy by the provisions of Articles 4-septies.2 and 190-bis.2 of Legislative Decree no. 58 of 24 February 1998 (the "Consolidated Financial Act” or the “TUF"), and establish a supervisory and sanctioning regime for securitisation transactions. In particular, these amendments implement Article 4-septies.2 TUF in order to: (i) incorporate into the relevant Circular the operational guidelines (applicable, inter alia, to less significant banks and to financial intermediaries pursuant to article 106 of the Italian Consolidated Banking Act) set out in the Bank of Italy's Communication dated 21 December 2022 relating to the notification of the securitisation transactions to the Bank of Italy ("Modalità di implementazione dell'articolo 4-septies.2 del D.lgs. 58/1998 (TUF) del 21 dicembre 2022") (the "Communication"); and (ii) clarify how the Bank of Italy may exercise its supervisory powers in transactions involving non-supervised entities among the persons subject to the SECR obligations (commonly referred to as "mixed transactions").

In particular, compared to the original content of the Communication, the main changes include:

1. the introduction of a standard form of letter of compliance of the securitisation transactions to the requirements set out in Articles 6, 7 and 8 of the SECR;
2. the obligation, in the context of the reviews conducted by the supervisory units of the relevant less significant bank and/or the financial intermediary (as the case may be), to prepare a document containing: (i) a description of the policies, procedures and specific measures aimed at ensuring compliance with the requirements set out in Articles 6, 7 and 8 of the SECR; and (ii) an assessment of how these policies, procedures and specific measures have been implemented by the competent units or departments involved in the securitisation transaction. The assessment should also confirm that the policies, procedures and specific measures are adequate, that they have been properly implemented and complied with in order to ensure compliance with the requirements set out in Articles 6, 7 and 8 of the SECR and that no non-compliance has been detected;
3. the possibility to delegate the responsibility relating to the notification of the securitisation transaction to the servicer; such possibility is also envisaged in transactions involving two or more supervised entities as originators (so-called “multi-originator transactions”). It is however specified that, in such case, even though the servicer has been entrusted with the responsibility to carry out the notification of the securitisation transaction, the compliance letter shall in any event be signed by the chairman of the bank’s board of directors and/or the chairman of the financial intermediary’s board of directors (as the case may be);
4. the identification, in the context of securitisation transactions involving two or more supervised entities as originators (so-called multi-originator transactions), of the party (which will be selected among the above-mentioned supervised originators) in charge to carry out the notification of the securitisation transaction; and
5. the undertaking, by the bank acting as originator or original lender or sponsor or by the financial intermediary acting as originator or original lender, of the role as point-of-contact for the Bank of Italy with regard to the information to be provided to the Bank of Italy itself by the non-supervised entity performing any of the obligations set out in Articles 6, 7 and 8 of the SECR in the context of the transaction.

The above-mentioned updates will become effective on 1 July 2024. It remains understood that, the provisions of the Communication will continue to apply until 30 June 2024.

Authored by Andrea Cicia, Leonardo Bafunno, Giacomo Farinati.