Amendments to covered bond legislation and rules
Act no. 7/2023 amending the Act on Covered Bonds, no. 11/2008, and the Act on Financial Undertakings, no. 161/2002 entered into force today. The Act implements Directive (EU) 2019/2162 on the issue of covered bonds and covered bond public supervision and Regulation (EU) 2019/2160 amending Regulation (EU) 575/2013 (CRR) as regards exposures in the form of covered bonds. The EU instruments are intended to create a homogeneous collective market for covered bonds within Europe.
The main amendments made to the Act on Covered Bonds include the requirement that in order to receive authorisation for covered bond issuance, issuers must have satisfactory policies, systems, and processes in place for approval, amendment, renewal, and refinancing of loans in the collateral portfolio. Issuers must also have the requisite competence and expertise in covered bonds. Issuers must always have enough liquid assets in the cover pool to cover maximum outflows of liquid assets from covered bonds for the next 180 days, requirements concerning issuers’ information disclosures to investors and the Central Bank are more detailed than before, and postponement of covered bond payment dates is authorised. The number of violations subject to administrative fines has been increased, as has the maximum fine amount. Moreover, issuers are authorised to market bonds satisfying the conditions laid down in the law as “European Covered Bonds” or “European Covered Bonds (Premium)”.
Concurrent with these statutory amendments, the Central Bank has adopted new Rules on Covered Bonds, no. 190/2023, which also took effect today and supersede the previous Rules no. 528/2008 on the same topic. The new Rules mainly reflect the amendments made to the Act on Covered Bonds. For instance, they now include a new provision specifying which assets may be included with liquid assets pursuant to the new Article 6(a) of the Act. There is also a new provision on issuers’ disclosures to the Central Bank, in accordance with the new Article 24(a) of the Act. Furthermore, the provision in the Rules on covered bond-related derivatives has been amended, and there are other minor amendments as well.
Act no. 7/2023 amending the Act on Covered Bonds can be found on the Law and Ministerial Gazette [Stjórnartíðindi] website.
The Rules on Covered Bonds, no. 190/2023, can be found on the Law and Ministerial Gazette [Stjórnartíðindi] website.
1 March 2023