S.L. 345.27 Art. 5Intragroup pooled covered bond structures.

The competent authority may issue Covered Bonds Rules regarding the use of intragroup pooled covered bond structures under which covered bonds issued by a credit institution that belongs to a group (hereinafter referred to in these regulations as "internally issued covered bonds") are used as cover assets for the external issue of covered bonds by another credit institution that belongs to the same group (hereinafter referred to in these regulations as "externally issued covered bonds"). Those Covered Bonds Rules shall include at least the following requirements:

(a) the requirement for the internally issued covered bonds to be sold to the credit institution issuing the externally issued covered bonds;

(b) the requirement for the internally issued covered bonds to be used as cover assets in the cover pool for the externally issued covered bonds and to be recorded on the balance sheet of the credit institution issuing the externally issued covered bonds;

(c) the requirement for the cover pool for the externally issued covered bonds to contain only internally issued covered bonds issued by a single credit institution within the group;

(d) the requirement for the credit institution issuing the externally issued covered bonds to sell such covered bonds to covered bond investors outside the group;

(e) the requirement for both the internally and externally issued covered bonds to qualify for credit quality step 1 as referred to in Part Three, Title II, Chapter 2 of the CRR at the time of issue and to be secured by eligible cover assets as referred to in regulation 3:

Provided that, for the purposes of this paragraph, the competent authority may allow covered bonds that qualify for credit quality step 2 as referred to in Part Three, Title II, Chapter 2 of the CRR following a change that results in a lower credit quality step of the covered bonds, to continue to be part of an intragroup pooled covered bond structure, provided that the competent authority concludes that the change in credit quality step is not due to a breach of the requirements for approval as set out in article 31D(3) of the Act:

Provided further that, the competent authority shall subsequently notify the EBA of any such decision;

(f) in the case of cross-border intragroup pooled covered bond structures, the requirement for the cover assets of the internally issued covered bonds to comply with the eligibility and coverage requirements of the externally issued covered bonds.