Cap. 345 Art. 31IClaims and privileged claims.

(1) Covered bond investors and counterparties of derivative contracts that comply with regulation 8 of the Financial

Markets Act (Covered Bonds) Regulations shall be entitled to the following:

(a) a claim against the credit institution issuing the covered bonds;

(b) in the case of the insolvency or resolution of the credit institution issuing the covered bonds, a privileged claim against the principal and any accrued and future interest on cover assets;

(c) in the case of the insolvency of the credit institution issuing the covered bonds and in the event that the privileged claim referred to in paragraph (b) cannot be fully satisfied, a claim against the insolvency estate of that credit institution, which ranks with the claims of the credit pari passu institution’s ordinary unsecured creditors determined in accordance with the applicable laws in force in Malta at the time governing the ranking in normal insolvency proceedings:

Provided that the claims referred to in this sub-article shall be limited to the full payment obligations attached to the covered bonds.

(2) Credit institutions issuing covered bonds shall ensure that covered bond investors and counterparties of derivative contracts that comply with regulation 8 of the Financial Markets Act (Covered

Bonds) Regulations, are entitled to the claims referred to in sub-article

(1), subject to the conditions laid down in regulation 68(7) of the Recovery and Resolution Regulations.

(3) Without prejudice to sub-article (4), the Minister, acting on the advice of the competent authority, may make, amend or revoke regulations to give effect to the provisions of sub-articles (1) and (2).

(4) The competent authority may issue Covered Bonds Rules for the better implementation of sub-articles (1) and (2).