Directive (EU) 2019/2162 of the European Parliament and of the CouncilShow full title

Article 8 U.K. Intragroup pooled covered bond structures

Member States may lay down rules regarding the use of intragroup pooled covered bond structures under which covered bonds issued by a credit institution that belongs to a group (‘internally issued covered bonds’) are used as cover assets for the external issue of covered bonds by another credit institution that belongs to the same group (‘externally issued covered bonds’). Those rules shall include at least the following requirements:

(a)

the internally issued covered bonds are sold to the credit institution issuing the externally issued covered bonds;

(b)

the internally issued covered bonds are used as cover assets in the cover pool for the externally issued covered bonds and are recorded on the balance sheet of the credit institution issuing the externally issued covered bonds;

(c)

the cover pool for the externally issued covered bonds contains only internally issued covered bonds issued by a single credit institution within the group;

(d)

the credit institution issuing the externally issued covered bonds intends to sell them to covered bond investors outside the group;

(e)

both the internally and externally issued covered bonds qualify for credit quality step 1 as referred to in Part Three, Title II, Chapter 2 of Regulation (EU) No 575/2013 at the time of issue and are secured by eligible cover assets as referred to in Article 6 of this Directive;

(f)

in the case of cross-border intragroup pooled covered bond structures, the cover assets of the internally issued covered bonds comply with the eligibility and coverage requirements of the externally issued covered bonds.

For the purposes of point (e) of the first subparagraph of this Article, competent authorities designated pursuant to Article 18(2) may allow covered bonds that qualify for credit quality step 2 following a change that results in a lower credit quality step of the covered bonds to continue to be part of an intragroup pooled covered bond structure, provided that those competent authorities conclude that the change in credit quality step is not due to a breach of the requirements for permission as set out in the provisions of national law transposing Article 19(2). Competent authorities designated pursuant to Article 18(2) shall subsequently notify EBA of any decision pursuant to this subparagraph.