A new Regulation and Directive amending certain provisions of the Capital Requirements Regulation on covered bonds and introducing standards on the issuance of covered bonds and covered bond public supervision has been published in the Official Journal of the European Union. The Regulation and Directive will both enter into force on January 7, 2020. The Regulation will apply directly in all Member States from July 8, 2022, while Member States must publish national legislation implementing the Directive by July 8, 2021 and must apply that legislation from July 8, 2022.
“Covered bonds” are securities issued by financial institutions and backed by assets, meaning investors take some security against the risk of issuer default. The CRR provides for preferential treatment for covered bonds that fulfill certain conditions. The new Regulation makes certain amendments to the CRR to strengthen the quality of the covered bonds eligible for favorable capital treatment, including by:
The new Directive aims to harmonize the regulation and treatment of covered bonds across EU Member States. It does this by:
View the Regulation.
View the Directive.
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