Guideline (EU) 2020/1690 of the European Central Bank of 25 September 2020 amending Guideline (EU) 2015/510 on the implementation of the Eurosystem monetary policy framework (ECB/2020/45)

‘2 Reserve holdings that comply with minimum reserve requirements pursuant to Regulation (EC) No 2531/98 and Regulation (EC) No 1745/2003 (ECB/2003/9) shall be remunerated in accordance with Regulation (EC) No 1745/2003 (ECB/2003/9).’;

‘3 Reserve holdings that exceed the minimum reserves referred to in paragraph 2 shall be remunerated in accordance with Decision (EU) 2019/1743 of the European Central Bank (ECB/2019/31) .

1 In order to be eligible, marketable assets other than ABSs, legislative covered bonds and multi cédulas shall be unsecured obligations of both the issuer and guarantor. For marketable assets with more than one issuer or with more than one guarantor, the requirement in this paragraph shall apply to each issuer and each guarantor.

2 Marketable assets which are secured and were eligible before 1 January 2021 but do not comply with the eligibility requirements as set out in this Article shall remain eligible until 1 January 2026, provided that they fulfil all other eligibility criteria for marketable assets. By derogation from the first sentence of this paragraph, covered bonds which are neither legislative covered bonds nor multi cédulas, shall become ineligible from 1 January 2021.’;

1 Without prejudice to the eligibility of legislative covered bonds pursuant to Article 64a, in order for EEA legislative covered bonds backed by ABSs to be eligible, the cover pool of such bonds (for the purposes of paragraphs 1 to 4, “the cover pool”) shall only contain ABSs that comply with all of the following. (a) The cash-flow generating assets backing the ABSs meet the criteria laid down in Article 129(1)(d) to (f) of Regulation (EU) No 575/2013. (b) The cash-flow generating assets were originated by an entity closely linked to the issuer, as described in Article 138. (c) They are used as a technical tool to transfer mortgages or guaranteed real estate loans from the originating entity into the cover pool.

2 Subject to paragraph 4, the NCBs shall use the following measures to verify that the cover pool does not contain ABSs that do not comply with paragraph 1. (a) On a quarterly basis, the NCBs shall request a self-certification and undertaking of the issuer confirming that the cover pool does not contain ABSs that do not comply with paragraph 1. The NCB’s request shall specify that the self-certification must be signed by the issuer’s Chief Executive Officer (CEO), Chief Financial Officer (CFO) or a manager of similar seniority, or by an authorised signatory on their behalf. (b) On an annual basis, NCBs shall request an ex post confirmation by external auditors or cover pool monitors from the issuer, confirming that the cover pool does not contain ABSs that do not comply with paragraph 1 for the monitoring period.

3 If the issuer fails to comply with a particular request or if the Eurosystem deems the content of a confirmation incorrect or insufficient to the extent that it is not possible to verify that the cover pool complies with the criteria in paragraph 1, the Eurosystem shall decide not to accept the EEA legislative covered bonds as eligible collateral or to suspend their eligibility.

4 Where the applicable legislation or prospectus exclude the inclusion of ABSs that do not comply with paragraph 1 as cover pool assets, no verification pursuant to paragraph 2 shall be required.

5 For the purposes of paragraph 1(b), the close links shall be determined at the time that the senior units of the ABSs are transferred into the cover pool of the EEA legislative covered bond.

6 The cover pool of non-EEA G10 legislative covered bonds shall not contain ABSs.’;

NCBs, or supervisors or external auditors, shall conduct a verification of the appropriateness of the procedures and systems used by the counterparty to submit the information on credit claims to the Eurosystem prior to the first mobilisation of credit claims by the counterparty. The verification of the procedures and systems shall subsequently be conducted at least once every five years. In the event of significant changes to such procedures or systems, a new verification may be conducted.’;

1 If a counterparty fails to comply with any of the obligations referred to in Article 154(1), the Eurosystem shall impose a financial penalty for each case of non-compliance. The applicable financial penalty shall be calculated in accordance with Annex VII.

2 Where a counterparty rectifies a failure to comply with an obligation referred to in Article 154(1)(c), and notifies the NCB before the counterparty has been notified of the non-compliance by the NCB, ECB or an external auditor (“self-reported infringement”), the applicable financial penalty as calculated in accordance with Annex VII shall be reduced by 50 %. The reduction of the financial penalty shall also be applicable in cases where the counterparty notifies the NCB of a breach that was not discovered by the ECB or NCB and in relation to assets that have been demobilised. The reduction of the financial penalty shall not be applicable to assets that fall under the scope of an ongoing verification procedure of which the counterparty is aware due to a notification by the NCB, ECB or an external auditor.’;

1 This Guideline shall take effect on the day of its notification to the national central banks of the Member States whose currency is the euro.

2 The national central banks of the Member States whose currency is the euro shall take the necessary measures to comply with this Guideline and apply them from 1 January 2021. They shall notify the European Central Bank of the texts and means relating to those measures by 6 November 2020 at the latest.

This Guideline is addressed to all Eurosystem central banks.