The new European covered bond harmonisation Directive came into force on 8 January 2020, with its purpose to ensure that key features of covered bonds form part of a legal framework rather than just being programmatic contractual requirements. At this stage (subject to any COVID related extensions), EU member states have 18 months to adopt the Directive (taking effect from 8 July 2022). Third countries (non-EU member states) then have another 2 years (until 8 July 2024) to achieve equivalence in order to achieve preferential treatment under the European Capital Requirements Regulation. At this stage, the requirements for third country equivalence have not been prescribed so there is scope to lobby the European Union on behalf of third countries.
The ASF has had some preliminary discussions with the European Covered Bond Council (ECBC) and we have agreed that it would be valuable for a dedicated third country working group to be established to discuss the concept of harmonised equivalence among third countries. Based on this, there may be a need for the Australian and New Zealand community to open a dialogue with each of their local regulators to introduce regulatory changes or additions to accommodate key requirements of the European harmonisation Directive.
To kick start the project, the ASF convened a meeting of representatives of Australian and New Zealand covered bond issuers and local lawyers this week to discuss undertaking a detailed analysis on the key areas of impact of the European Directive on local covered bond laws and programs. Any local covered bond stakeholders are welcome to participate in this project by contacting the ASF