FI proposes partial waiver for covered bonds

Finansinspektionen proposes partial waiver from the requirements in Article 129 (1)(c) of the Capital Requirements Regulation (CRR) through a change in FI´s regulation (FFFS 2014:12) regarding prudential requirements and capital buffers.

Article 129 (CRR) specifies the requirements which the assets that secure covered bonds must fulfill, for the covered bonds to be eligible for preferential treatment according to the capital requirements. 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. In December 2012 the European Banking Authority (Eba) published their view on this. With Eba´s view it is clarified that derivatives are such assets that must fulfill the requirements in Article 129 (CRR). In Sweden the derivatives constitute the majority of the covered bonds´ issuer´s exposures towards credit institutions.

FI therefore proposes that the partial waiver is introduced in Sweden, to avoid concentration risks due to the limited number of derivative counterparties with rating corresponding to CQS 1.

The regulation is planned to entry into force on the 31st of March 2015.
FI arranges an external consultation meeting on the 10th of February 2015 at 13:00 at FI premises. Participation has to be notified at the latest 9th of February to jesper.bruzelius@fi.se.

Questions regarding the consultation are answered by Jesper Bruzelius (08-787 8014 or jesper.bruzelius@fi.se).

Written comments can be sent to Finansinspektionen, Box 7821, 103 97 Stockholm or by e-mail to finansinspektionen@fi.se, at the latest 16th of February.

When sending comments report FI Dnr 15-468.

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