The European Commission adopted the Delegated Regulation amending liquidity coverage rules for covered bond issuers. The adopted regulation amends Regulation 2015/61 (the LCR Delegated Regulation) to supplement the Capital Requirements Regulation, or CRR, on the liquidity coverage requirements for credit institutions. The amended regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. It shall apply from July 08, 2022.
The LCR Delegated Regulation is being amended to better allow credit institutions issuing covered bonds to comply with the general liquidity coverage requirement for a 30-calendar-day stress period (in Article 4(1) of Regulation the LCR Delegated Regulation) and with the cover pool liquidity buffer requirement of holding liquid assets to cover net liquidity outflows over the next 180 days (in Article 16 of the Covered Bond Directive). To clarify certain existing rules and to align the text of the LCR Delegated Regulation with the definitions laid down in CRR and the Covered Bond Directive, certain additional changes have proven necessary. The general liquidity coverage requirement and the cover pool liquidity buffer requirement result in an obligation for credit institutions issuing covered bonds to hold a certain amount of liquid assets for the same period of 30 calendar days. However, credit institutions should not have an obligation to cover the same outflows with different liquid assets for the same period. To address this overlap, a new amendment to the encumbrance criterion under the general liquidity coverage requirement has been introduced to treat liquid assets held as part of the cover pool liquidity buffer as unencumbered up to the amount of net liquidity outflows stemming from the associated covered bond program. Moreover, it is necessary to lay down monetization rules for the assessment of liquid assets held in a cover pool liquidity buffer.
Other amendments to the LCR Delegated Regulation include the following:
- Replace references to "secured lending transactions" in Article 28(3) and in Article 32(3)(b) and (4) of the LCR Delegated Regulation with references to "securities financing transactions." This would better align the text with the LCR standard agreed at international level by the Basel Committee on Banking Supervision.
- Insert a reference to official export credit agencies in point (g) of Article 7(4) of the LCR Delegated Regulation to ensure equal treatment of securities issued by export credit agencies guaranteed by the central government of a member state, irrespective of the organizational structure of the respective export credit agency.
- Several additional changes to the LCR Delegated Regulation to align it with Article 129 of CRR, as amended by Regulation 2019/2160 and the Covered Bond Directive.
Keywords: Europe, EU, Banking, CRR, Basel, Liquidity Risk, LCR, Covered Bond, Covered Bond Directive, EC, Subheadline
Previous ArticleECB Updates List of Supervised Entities in EU in August 2021
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.