The Regulated Covered Bonds Regulations 2008

PART 4U.K.ISSUERS

Acting without registrationU.K.

15.—(1) A person may not issue, or purport to issue, a regulated covered bond unless—

(a)it is admitted to the register of issuers; and

[F1(b)the bond is admitted to part one or part two of the register of regulated covered bonds.]

(2) A person which has been removed from the register of issuers may not make any further issue under a programme of covered bonds which has been admitted to the register of regulated covered bonds.

(3) Contravention of the prohibition in paragraph (1) or (2) by a person is a contravention of a requirement imposed on it by these Regulations, but does not—

(a)make any transaction void or unenforceable; or

(b)give rise to any right of action for breach of statutory duty.

Textual Amendments

Sums derived from the issue of regulated covered bondsU.K.

16.  An issuer must lend sums derived from the issue of a regulated covered bond to the owner of the relevant asset pool.

General requirementsU.K.

17.—(1) An issuer of a regulated covered bond must enter into arrangements with the owner of the relevant asset pool for the maintenance and administration of that pool.

(2) The arrangements must provide for the following requirements—

(a)a record is kept of each asset in the asset pool;

(b)the asset pool is, during the whole period of validity of the regulated covered bond, capable of covering—

(i)claims attaching to the bond; and

(ii)sums required for the maintenance, administration and winding up of the asset pool;

(c)there is timely payment of claims attaching to the bond to the regulated covered bond holder; F2...

(d)the asset pool is of sufficient quality to give investors confidence that in the event of the failure of the issuer there will be a low risk of default in the timely payment by the owner of claims attaching to the bond;

[F3(e)the eligible property in the asset pool of a single asset class bond consists only of eligible property of the same class as the eligible property included in the asset pool of the regulated covered bond when it was registered;

(g)the total amount of interest payable in the period of twelve months following any given date in respect of eligible property in the asset pool is not less than the interest which would be payable in relation to the regulated covered bonds issued under the programme in that period, assuming that the reference rates applicable on the given date do not change in that period.

(f)the total principal amounts outstanding in respect of eligible property in the asset pool is more than 108% of the total principal amounts outstanding in relation to the bonds to which the asset pool relates; and]

[F4(2A)  In determining whether the requirement in subparagraph (e) of paragraph (2) is satisfied, no account shall be taken of eligible property which is liquid assets.

(2B)  Subject to paragraph (2C), in determining whether the requirement in subparagraph (f) of paragraph (2) is satisfied, the total principal amounts outstanding in respect of eligible property which is liquid assets shall not exceed an amount which is the sum of—

(a)8% of the total principal amounts outstanding in relation to bonds with a maturity of one year or more, and

(b)100% of the total principal amounts outstanding in relation to bonds with a maturity of less than one year.

(2C)  In applying paragraph (2B) in relation to the asset pool of a single asset class bond which is comprised only of assets within class 1 as specified in regulation 2(1A)(a), no account shall be taken of eligible property which is within paragraph (a) of the definition of “liquid assets” in regulation 1(2).

(2D) In ensuring that the arrangements satisfy the requirements in subparagraphs (f) and (g) of paragraph (2), the issuer may take account of any hedging agreements which it has entered into in relation to the assets in the asset pool and the regulated covered bonds.

(2E) Nothing in this regulation shall prevent the Authority directing an issuer to observe additional requirements in relation to its asset pool.]

(3) This regulation does not apply in the event of the insolvency of the issuer.

Textual Amendments

[F5Asset pool monitorU.K.

17A.—(1) An issuer of a regulated covered bond must appoint an asset pool monitor for each asset pool maintained for the regulated covered bonds it has issued.

(2) The person appointed as asset pool monitor must—

(a)be eligible for appointment as a statutory auditor of the issuer under Part 42 of the Companies Act 2006; and

(b)not be disqualified from acting as a statutory auditor of the issuer by section 1214 of that Act (independence requirement).

(3) The asset pool monitor shall—

(a)inspect the compliance of the issuer with the requirements in regulations 16 and 17, and in particular—

(i)the extent to which the asset pool satisfies the conditions set out in regulation 17(2); and

(ii)the accuracy of the records kept in relation to each asset in the asset pool,

once every twelve months; and

(b)prepare an annual report in accordance with guidance issued by the Authority on the steps the issuer has taken to comply with regulations 16 and 17, and on the quality of the assets in the asset pool.

(4) Guidance issued to the asset pool monitor of an individual issuer under paragraph (3)(b) may identify particular issues to be addressed in the report for that issuer.

(5) A copy of the report prepared by the asset pool monitor shall be delivered to the Authority at such time as the Authority may direct.

(6) If it appears to the asset pool monitor that the issuer has failed to comply with the requirements set out in regulation 17, or that the issuer has not provided the monitor with all the information and explanations to which the monitor is entitled under this regulation, the asset pool monitor shall report in writing on that fact to the Authority as soon as possible.

(7) The asset pool monitor—

(a)has a right of access at all times to all books, accounts and vouchers of the issuer and of the owner of the relevant asset pool which are related to that asset pool, in whatever form they are held, and

(b)may require any of the persons referred to in paragraph (8) to provide such information and explanations as the asset pool monitor thinks necessary for the performance of the monitor's duties under this regulation.

(8) The persons referred to in paragraph (7)(b) are—

(a)any officer or employee of the issuer or the owner;

(b)any person holding or accountable for any of the books, accounts or vouchers of the issuer or the owner;

(c)any person who fell within either sub-paragraph (a) or (b) at a time to which the information or explanations required by the asset pool monitor relates or relate.

(9) A statement made by a person in response to a requirement under this regulation may not be used in evidence against him in criminal proceedings, except proceedings for an offence under section 398 of the Act in connection with the giving of information pursuant to requirements imposed by or under these Regulations.

(10) On the insolvency of the issuer of a regulated covered bond—

(a)the asset pool monitor appointed by the issuer shall continue to act as asset pool monitor for the owner of the relevant asset pool;

(b)any subsequent appointment of an asset pool monitor required under paragraph (1) of this regulation shall be made by the owner of the relevant asset pool;

(c)references in paragraphs (2), (3), (4) and (6) to the issuer shall be understood as references to the owner of the relevant asset pool; and

(d)references in paragraph (3) to regulations 16 and 17 shall be understood as references to regulation 24.]

Textual Amendments

Notification requirementsU.K.

18.—(1) An issuer must give the Authority such information in respect of—

(a)any regulated covered bond it issues;

(b)any series of covered bonds issued or proposed to be issued under a regulated covered bond;

(c)the assets in the relevant asset pool;

(d)the steps it has taken to comply with regulation 16 or 17;

as the Authority may direct.

(2) The issuer of a regulated covered bond must inform the Authority if at any time any of the requirements specified in regulation 17(2) are not, or are not likely to be, satisfied in respect of the relevant asset pool.

(3) The information required under paragraphs (1) and (2) must be given at such times, in such form and verified in such manner, as the Authority may direct.

[F6(4) Any information required under paragraphs (1) and (2), or any part of that information, must, if the Authority so directs, be published as directed by the Authority.

(5) Nothing in paragraph (4) entitles the Authority to direct publication of information which the issuer would be entitled to refuse to disclose in court proceedings on grounds of legal professional privilege.]

Textual Amendments

Change of issuerU.K.

19.—(1) An issuer of a regulated covered bond may transfer the benefits and obligations accruing to or falling upon it under all contracts relating to the relevant asset pool to another person only if that person has been admitted to the register of issuers.

(2) Where a transfer takes place in accordance with paragraph (1), that person shall be an issuer of that regulated covered bond for the purposes of these Regulations.

Material changes to the regulated covered bondU.K.

20.—(1) Where an issuer of a regulated covered bond proposes to make a material change to the contractual terms of the bond, it must give the Authority such—

(a)notice of the proposed change; and

(b)information in respect of the proposed change;

as the Authority may direct.

(2) The information required under paragraph (1) must be given at such time, in such form and verified in such manner, as the Authority may direct.

(3) If it appears to the Authority that the proposed change will not prevent the issuer and owner of the relevant asset pool from continuing to comply with the requirements imposed on them by or under these Regulations, it must give the issuer written notice of its decision to approve the change before the end of a period of 3 months beginning with the date on which the information required under paragraph (1) is provided.

(4) If it appears to the Authority that the proposed change may prevent the issuer or the owner of the relevant asset pool from complying with the requirements imposed upon them by or under these Regulations, it may decide not to approve the change and give the issuer a decision notice.

(5) If the Authority proposes to give a decision notice under paragraph (4), it must give the issuer a warning notice before the end of a period of 3 months beginning with the date on which the information required under paragraph (1) is provided.

(6) The Authority must, having considered any representations made in response to the warning notice—

(a)if it decides to do so, give a decision notice under paragraph (4); or

(b)if it decides not to give a decision notice, give the issuer a notice of discontinuance and written notice of its decision to approve the change.

(7) If the Authority gives a decision notice under paragraph (4), the issuer may refer the matter to the [F7Upper Tribunal].

(8) The issuer may not make the proposed change before it has received a written notice from the Authority approving the change.

Textual Amendments