NORWAY Trends and Developments Contributed by: Ida Marie Windrup, Markus Nilssen and Daniel Jovanovic, BAHR
Prior to 2016, Norwegian securitisation rules existed but were widely viewed as inflexible and inadequate to promote an active and liquid securitisation market in Norway. The regulatory framework was considered overly restrictive and failed to provide the necessary legal certainty and operational flexibility required for efficient securitisation structures. In 2016, the domes- tic regime was repealed entirely, effectively putting an end to any realistic potential for securitisation of Nor- wegian portfolios and leaving Norwegian banks with- out access to these important capital markets tools. The implementation of the EU’s Securitisation Regula- tion from 1 August 2025 therefore introduces a pow- erful and sophisticated new tool in Norwegian banks’ regulatory and capital management toolbox. This development is expected to have far-reaching impli- cations for how Norwegian banks manage their bal- ance sheets, optimise capital allocation, and access funding markets. In the short term, market participants expect banks to primarily consider synthetic (“on balance sheet”) securitisation structures for capital relief and risk- sharing purposes. These structures offer significant potential for capital savings whilst presenting less operational complexity compared to traditional secu- ritisation structures, making them an attractive start- ing point for banks new to these markets. The appeal of synthetic structures is particularly pro- nounced given their ability to provide meaningful capi- tal relief without the need to transfer assets off balance sheet, thereby maintaining customer relationships and operational control whilst achieving regulatory capital benefits. These structures also typically require less extensive operational infrastructure and can be imple- mented more quickly than traditional securitisations.
On the funding side, many Norwegian banks have his- torically relied heavily on covered bonds and unse- cured senior funding for their long-term funding needs, creating well-established and efficient funding chan- nels. Traditional securitisation structures may there- fore be somewhat less frequent among these banks initially, unless they prove to be more cost-effective than existing alternatives or offer other significant advantages such as diversification benefits, access to different investor bases, or improved asset-liability matching capabilities. However, as the market develops and banks gain experience with these structures, it is anticipated that traditional securitisation will also play an increasingly important role, particularly for banks seeking to diver- sify their funding sources, access new investor bases, or optimise the funding costs for specific asset class- es. The development of a robust securitisation market in Norway could also attract international investors and create new opportunities for cross-border capi- tal flows, further enhancing the depth and liquidity of Norwegian capital markets.
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