The European Commission’s plans to restrict banks from investing in structured finance securities unless they hold a minimum of 10% in the transactions they have originated themselves could spawn the rise in a new series of off-balance investment vehicles, an esoteric area of the credit markets that amplified the fallout from the sub-prime crisis.

A report today from Fitch Ratings, the rating agency, warned that the application of the proposed rule to European bank investors, who are actively buying structured finance securities, could encourage these institutions to devise ways of continuing to invest by seeking ways to make investments off-balance sheet so as to avoid the restriction.