IFRS changes securitisation on continent

"But strict new IFRS rules make it more difficult for companies to keep special purpose entities off their balance sheets. They also require them to provide more proof that they have given up claims to risks and rewards carried by the assets.
If companies retain some claim over the assets they cannot be 'derecognised'. 'Most prior deals haven't been structured in a way to achieve the level of transfer of control that would be necessary under the new rules,' said Ms Harding.
'Originators have got to restructure to transfer more risk, or the securitised assets will stay on the balance sheet,' she said. Bankers were working on models that would ensure an off balance sheet result, she added.
Jacquie Driver, head of securitisation at KPMG, said some originators were accepting the need to transfer more risks and rewards, but that IFRS was leading others to question the merits of securitisation.
'If people are not bothered about derecognition they say why bother doing securitisation. Why not just do a covered bond instead, which will provide the funding alone?'
She said IFRS would have a relatively smaller impact on securitisation in the UK because rules on derecognition were different from elsewhere. 'In the rest of Europe they have been derecognising so this is where they're getting a big shock.'" Source: Financial Times