After months of tough negotiations, a landmark agreement was reached between the Maltese Presidency of the Council of the EU and the European Parliament on the development of a securitisation market in Europe.

Securitisation is the process by which a lender – typically a bank – refinances a set of loans or assets, such as mortgages, automobile leases, consumer loans or credit card accounts, by converting them into securities. The repackaged loans are divided into different risk categories, tailored to the risk/reward appetite of investors.

This was one of the main elements of the EU’s 2015 plan to develop a fully functioning Capital Market Union by the end of 2019, and a key target for the financial sector of the Presidency.

Developing a securitisation market will help create new investment possibilities and provide an additional source of finance, particularly for SMEs and start-ups.

The swift implementation of the securitisation package could unlock up to €150 billion of additional funding to the real economy.

The agreement provides clear and transparent rules which also minimise risks, thus allowing for EU citizens and entrepreneurs to benefit from secure and accessible loans.

The agreement will now be submitted for confirmation by both the Council of the EU and the European Parliament.