Instruction No. 1/2020

Instruction No. 1/2020 BO No. 1/2020 • 2020/01/15 .................................................................................................................................................................................................. Topics Supervision :: Supervision Mod. 99999940/T – 01/14 Index Text of the Instruction Text of the Instruction Subject: Instruction amending Instruction No. 7/2019, of May 30, which incorporates the EBA Guidelines on the STS criteria applicable to ABCP and non-ABCP securitisation (EBA/GL/2018/08 and EBA/GL/2018/09)

Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017, establishing a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation (“Regulation (EU) 2017/2402”), introduced into the European legal order the definition of STS securitisation (acronym in the English language for simple, transparent and standardised) and defined specific rules for a securitisation operation to be classified as such (“STS criteria”).

Under Article 23(3) and Article 19(2) of Regulation (EU) 2017/2402, the European Banking Authority (“EBA”) issued, on 12 December 2018, the Guidelines on the interpretation and harmonised application of the STS criteria applicable to ABCP (asset-backed commercial paper) securitisations and to non-ABCP securitisations (i.e., securitisation secured by assets other than commercial paper), respectively, EBA/GL/2018/08 and EBA/GL/2018/09.

The addressees of the Guidelines are participants in securitisation operations and the competent authorities designated under Articles 29(1) and 29(5) of Regulation (EU) 2017/2402.

Article 29(1) of Regulation (EU) 2017/2402 determines that the supervision of the due diligence duties, enshrined in Article 5 of that Regulation, to be observed by institutional investors that are credit institutions and investment firms subject to Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013, and that do not act as originators, sponsors or original lenders, is the responsibility of the Bank of Portugal and the European Central Bank (“ECB”), with regard to the specific tasks conferred upon it by Council Regulation (EU) No 1024/2013 of 15 October 2013.

In this context, the Bank of Portugal issued Instruction No. 7/2019, of 30 May, which incorporates the aforementioned Guidelines into the national legal order (“Instruction No. 7/2019”). For its part, the ECB notified the EBA on 29 May 2019 of its intention to comply with the Guidelines.

Parallel to this, Article 25(4) of Regulation (EU) 2017/2402 determines that credit institutions acting as sponsors in ABCP securitisation operations must exercise their own due diligence and ensure compliance with the requirements set out in Articles 5(1) and 5(3) of the aforementioned Regulation.

Instruction No. 1/2020 BO No. 1/2020 • 2020/01/15 Topics Supervision :: Supervision .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 Having been published Law No. 69/2019, of 28 August, which amends and republicates Decree-Law No. 453/99, of 5 November, which establishes the regime for the assignment of credits and the transfer of risks for securitisation purposes and regulates traditional and synthetic securitisation, as well as the establishment and operation of credit securitisation funds and the management companies of those funds (“Law No. 69/2019”), it is necessary to ensure the inclusion, within the subjective scope of Instruction No. 7/2019, of credit institutions that are sponsors of an ABCP program in the context of Article 25(4) of Regulation (EU) 2017/2402, reflecting the attribution of competences to the Bank of Portugal operated by Article 66-A(b) of Decree-Law No. 453/99, of 5 November, to supervise compliance with the due diligence duties established in Articles 5(1) and 5(3) of the aforementioned Regulation by those sponsors.

In these terms, the Bank of Portugal, using the competence conferred upon it by Article 29(1)(e) and Article 29(5) of Regulation (EU) 2017/2402, by Article 66-A(2)(a) and (b) of Decree-Law No. 453/99, of 5 November, amended and republicated by Law No. 69/2019, of 28 August, by Article 17 of its Organic Law, approved by Law No. 5/98, of 31 January, and by Article 116(1)(f) of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 298/92, of 31 December, determines the following:

Article 1. Object This Instruction amends Instruction No. 7/2019, of 30 May, which incorporates the EBA Guidelines on the STS criteria applicable to ABCP and non-ABCP securitisation (EBA/GL/2018/08 and EBA/GL/2018/09).

Article 2. Amendment to Instruction No. 7/2019, of 30 May Article 2 of Instruction No. 7/2019, of 30 May, shall have the following wording:

“Article 2. […] This Instruction is applicable: a) When acting as institutional investors, within the meaning of Article 2(12)(g) of Regulation (EU) 2017/2402, other than the originator, sponsor or original lender: i. To less significant credit institutions, within the meaning of Article 6(4) of Council Regulation (EU) No 1024/2013 of 15 October; ii. To investment firms qualified as financial companies under Article 6(1)(a) of the General Regime of Credit Institutions and Financial Companies, approved by Decree-Law No. 289/92, of 31 December.

Instruction No. 1/2020 BO No. 1/2020 • 2020/01/15 Topics Supervision :: Supervision .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 b) When acting as sponsors, within the meaning of Article 2(5) of Regulation (EU) 2017/2402, for the purposes of Article 25(4) of that Regulation, to credit institutions.”

Article 3. Entry into force This Instruction enters into force on the day following its publication.