The European Banking Authority (EBA) has published an opinion on the preferential capital treatment of covered bonds along with a report on the EU covered bonds frameworks and capital treatment.
The report provides the first comprehensive review of the EU national covered bond frameworks, identifies key features and prudentially sound practices and offers advice on the overall conditions justifying preferential risk weight treatment of certain types of covered bond in the EU.
In the opinion the EBA expresses support for the current approach on the preferential treatment of covered bonds laid down in the Capital Requirements Regulation. However, the EBA recommends additional criteria to qualify for preferential treatment. The opinion also calls for further clarification on current disclosure requirements and provides advice on the preferential treatment of some specific cover assets.