Featured Product

    ECB Guideline on Temporary Measures on Eligibility of Collateral

    May 07, 2020

    ECB finalized a guideline (ECB/2020/29) on additional temporary measures for the Eurosystem refinancing operations and eligibility of collateral. The guideline ECB/2020/29 amends the guideline ECB/2014/31. The new guideline shall take effect on the day of its notification to the national central banks and shall remain in effect until September 29, 2021.

    The Governing Council of ECB adopted collateral easing measures on April 07, 2020. Further to these measures, on April 22, 2020, the Governing Council adopted a complementary set of decisions in response to the COVID-19 pandemic. Together with the measures adopted on April 07, 2020, these new measures aim to ensure that Eurosystem counterparties remain able to maintain and mobilize sufficient collateral to be able to participate in the Eurosystem liquidity-providing operations. Accordingly, participation in these operations with this collateral should be based on temporarily amended collateral eligibility criteria and risk control measures. 

    As per the decision, the Governing Council considers that the Eurosystem should temporarily continue to admit as collateral, the marketable assets and the issuers of these assets that fulfilled minimum credit quality requirements on April 07, 2020, notwithstanding a deterioration in the credit ratings decided by the credit rating agencies accepted in the Eurosystem, as long as the ratings remain above a certain quality level. The Governing Council also considers that this should not affect the eligibility criteria for outright purchases under the ECB asset purchase programs. The Governing Council considers that the additional temporary measures set out in the guideline should apply until the first early repayment date under the third program of targeted longer-term refinancing operations (TLTRO-III). Therefore, Guideline ECB/2014/31 has been amended as follows:

    • Article 8b on admission of certain marketable assets and issuers eligible on April 07, 2020 has been inserted
    • Annexes IIa and IIb have been replaced. Annex IIa of the guideline (ECB/2020/29) contains valuation haircut levels (in %) applied to asset-backed securities (ABS) eligible under Article 3(2) and Article 8b of the guideline (ECB/2020/29). Annex IIb of the guideline (ECB/2020/29) contains valuation haircut levels (in %) applied to marketable assets, other than ABS, referred to in Articles 8a and 8b.

    When determining compliance for the period between April 07, 2020 and May 18, 2020, with the credit quality requirements applicable to the assets, issuers, and guarantors referred to in Article 8b(2) to (8) of Guideline ECB/2014/31, the national central banks shall refer to the reference data relevant to those assets, issuers, and guarantors on April 07, 2020, as provided by ECB.

     

    Related Link: ECB Guideline (PDF)

    Keywords: Europe, EU, Banking, Securities, COVID-19, Credit Risk, TLTRO III, Collateral, Credit Ratings, Procyclicality, Credit Rating Agencies, Asset Backed Securities, ECB

    Featured Experts
    Related Articles
    News

    PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK

    PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.

    April 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Methods of Prudential Consolidation

    EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).

    April 15, 2021 WebPage Regulatory News
    News

    EBA Updates List of Other Systemically Important Institutions in EU

    EBA updated the list of other systemically important institutions (O-SIIs) in EU.

    April 15, 2021 WebPage Regulatory News
    News

    BCBS Report Concludes Basel Risk Categories Can Capture Climate Risks

    BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.

    April 14, 2021 WebPage Regulatory News
    News

    UK Authorities Welcome FSB Review of their Remuneration Regime

    UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.

    April 14, 2021 WebPage Regulatory News
    News

    PRA and FCA Letter on Addressing Risks from Use of Deposit Aggregators

    PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.

    April 14, 2021 WebPage Regulatory News
    News

    MFSA to Amend Banking Act and Rules in Coming Months to Transpose CRD5

    MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.

    April 14, 2021 WebPage Regulatory News
    News

    EC Delegated Regulation on Specialized Lending Exposures Under CRR

    EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.

    April 14, 2021 WebPage Regulatory News
    News

    OSFI Proposes to Enhance Assurance Expectations for Basel Returns

    OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.

    April 13, 2021 WebPage Regulatory News
    News

    ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks

    ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.

    April 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6858