Article 207(2)(2) states that "Securities issued by the obligor, or any related group entity, shall not qualify as eligible collateral. This notwithstanding, the obligor's own issues of covered bonds falling within the terms of Article 129 qualify as eligible collateral when they are posted as collateral for a repurchase transaction, provided that they comply with the condition set out in the first subparagraph". Whereas the first sentence includes securities issued by "any related group entity", the second sentence which acts as the carve out, omits such securities. Is this an intended ommission?
Some banks in the EU issue covered bonds through different group entities. It may be a separatelly capitalised mortgage bank which is part of a bank group or a different vehicle entirely which acts as the Issuer but which is still part of the same bank group. Including covered bonds issued by related group entities into the definition of eligible collateral appears logical because if a covered bond qualifies for a repo transaction where the obligor is the Issuer it should also qualify for a repo transaction where the obligor is a different but a related group entity.
Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.
If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in the Additional background and guidance for asking questions. We hope for your understanding.