Question ID
2015_1858
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Securitisation and Covered Bonds
Article
207
Paragraph
2
Subparagraph
2
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
n/a
Type of submitter
Credit institution
Subject matter
Requirements for financial collateral (Covered Bonds)
Question

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?

Background on the question

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.

Submission date
Rejected publishing date
Rationale for rejection

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Status
Rejected question