FI intends to implement a partial waiver for covered bonds

The implementation of the partial waiver does not result in lower requirements on issuers of Swedish covered bonds, as the partial waiver means that the current rules will continue to be in place.

Background

Article 129 in CRR specifies the requirements to be fulfilled by exposures used as collateral for covered bonds in order for the bonds to be eligible for preferential treatment from a capital requirement perspective. Item (1)(c) in the article stipulates that exposures towards credit institutions must be against counterparties with a rating corresponding to credit quality step 1 (CQS 1).

CRR gives the competent authority the possibility to implement a partial waiver from this requirement and allow exposures also toward credit institutions with a rating corresponding to CQS 2. The Danish FSA has implemented such a partial waiver, in regard to which EBA has now published its opinion.

EBA's opinion

EBA is of the opinion that such partial waiver is adequately justified given that Denmark has a significant potential concentration problem stemming from the application of the requirement under Article 129 (1)(c).

Eba:s opinions

Finansinspektionen's intentions

Finansinspektionen will implement the partial waiver within its jurisdiction. This is done in order to avoid the potential concentration problem that would otherwise arise from the restriction of possible exposures.