EU regulation and Covered Bonds

At European level too, fixed-income bonds with special collateralization are governed by special legal frameworks. We have compiled the most important provisions governing Pfandbriefe and Covered Bonds for you.While the European Union-level documents are offered in their English language version, most documents on the national (German) level exist in German language only.


Basel I – History

The Basel Committee on Banking Supervision, composed of the presidents of central bank of the G10 and other countries, has set via the revision of the Basel Capital Accord of 1988 (Basel I) following objectives:

  • to make banks’ capital requirements more consistent than before with the actual risk,

  • to take into account recent developments on the financial markets and in the risk management of credit institutions.

Basel II

The Basel II rules were published in June 2004. The framework agreement was implemented in European law through the Capital Requirements Directive (CRD) including an amendment to the directives 2000/12/EC relating to the taking up and pursuit of the business of credit institutions and 93/6/EEC.

The amended directives were published on June 30, 2006 in the Official Journal of the EU.

National implementation

National implementation (in DE) is achieved by modifications to the German Banking Act (Kreditwesengesetz, KWG), to the Large Exposure Regulation (Großkredit- und Millionenkreditverordnung, GroMiKV) as well as through the Solvency Regulation (Solvatilitätsverordnung, SolvV), which replaced Principle I KWG.

The new rules entered into force on January 1, 2007.

Capital Requirements Directive (CRD IV) >> Capital Requirements Regulation (CRR) >> Delegated Regulation (EU) 2015/61 on LCR >> Delegated Regulation (EU) 2015/61 on Leverage Ratio >> Engelhard, Fritz (Beitrag): Covered Bonds and the EU Capital Markets Directive, ECBC Fact Book 2007 >> Weighting of covered bonds complying with Art. 63 (2) Consolidated Banking Directive 2000/12/EC (former Art. 11 II Solvency Ratio Directive), as at 11/2006 Kälberer, Wolfgang (speech): The treatment of mortgages (RRE & CRE) and covered bonds under the new Capital Requirements Directive (CRD). Budapest, December 2004>> Dr. Marburger, Christian (article): Die künftige Eigenkapitalgewichtung von Pfandbriefen in Europa, 09/2004 >> Capital Requirements Directive (CRD): Directive 2006/48, excerpt (old) >>

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