EN ECB-PUBLIC 
 
 OPINION OF THE EUROPEAN CENTRAL BANK 
of 11 August 2021  
on a draft law on mortgage banks and covered bonds and related laws  
(CON/2021/26) 
Introduction and legal basis 
On 4 July 2021 the European Cent ral Bank (ECB) received a reque st from the Finnish Ministry of Finance 
for an opinion on a draft law on mortgage banks and covered bon ds and related laws (hereinafter the ‘draft 
law’). 
The ECB’s competence to deliver an opinion is based on Articles  127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the sixth indent of Artic le 2(1) of Council Decision 98/415/EC1, as 
the draft law relates to rules applicable to financial institut ions insofar as they materially influence the 
stability of financial instituti ons and markets and the ECB’s s pecific tasks concerning the prudential 
supervision of credit institut ions pursuant to Article 127(6) o f the Treaty. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the Europ ean Central Bank, the Governing Council 
has adopted this opinion. 
 
1. Purpose of the draft law 
The purpose of the draft law is to replace the current Law on m ortgage banks2. It implements Directive (EU) 
2019/2162 of the European Parliament and of the Council3 in Finnish law. In addition, the draft law contains 
certain provisions that are not r equired in order to implement Directive (EU) 2019/2162 but are designed to 
promote competition and harmonis e the regulation of this area i n view of the pronounced international and 
Nordic dimension of the covered bonds market. 
 
2. General observations  The vast majority of the draft law’s provisions do not exceed t he scope of Directive (EU) 2019/2162 with 
respect to the ECB’s fields of competence. 
 3. Specific observations 
 Allocation of supervisory com petences regarding covered bonds  
 
1  Council Decision 98/415/EC of 29 June 1998 on the consultatio n of the European Central Bank by national 
authorities regarding draft legisl ative provisions (OJ L 189, 3 .7.1998, p. 42). 
2  Laki kiinnitysluottopankki toiminnasta 16.7.2010/688. 
3  Directive (EU) 2019/2162 of the European Parliament and of the  Council of 27 November 2019 on the issue of 
covered bonds and covered bond public supervision and amending Directives 2009/65/EC and 2014/59/EU (OJ L 
328, 18.12.2019, p. 29). 
ECB-PUBLIC  
2 3.1 The draft law’s provisions regarding the right to issue add itional authorisations for the issuance of 
covered bonds must be interpreted in line with Council Regulati on (EU) No 1024/20134, Article 4(1)(a) 
of which gives the ECB the exclusive task of authorising credit  institutions and withdrawing 
authorisations of credit institutions. In accordance with Artic le 6(4) of Regulation (EU) No 1024/2013, 
the ECB exercises this responsib ility in respect of both signif icant and less significant institutions. 
This task is exercised for all banking activities listed in Ann ex I of Directive 2013/36/EU of the 
European Parliament and of the Council5 as well as for any additional activity allowed under national 
law6. 
3.2 The ECB wishes to draw the consulting authority’s attention  to the allocation of competences between 
the ECB, in its capacity as microprudential supervisor, and the  national competent authorities (NCAs) 
specifically with regard to the issuance of covered bonds as we ll as the necessity to ensure that this 
allocation is not affected by the draft law. 
3.3 The ECB has previously opined on the allocation of competen ces between the ECB and the NCAs7, 
noting that Directive (EU) 2019/2 162 makes provision for the su pervision of covered bonds by the 
NCAs and that this product supervision is distinct from and wit hout prejudice to the ECB’s prudential 
supervisory tasks under Regulatio n (EU) No 1024/2013 and, in pa rticular, does not affect the ECB’s 
exclusive task of authorising cr edit institutions and withdrawi ng authorisations of credit institutions, 
which may, depending on the national legal framework, include a  general authorisation to issue 
covered bonds. Similarly, the ECB remains competent to ensure t hat the prudential risks arising from 
covered bond issuances as well as investments in covered bonds are adequately managed and 
assessed by credit institutions. The ECB has also previously no ted8 that any possible authorisation 
for a specific covered bond programme or supervision of covered  bonds as a financial product would 
be considered as a product-specific regulation and, as such, to  fall under the supervision of a national 
competent authority. 
3.4 As is the case in various other Member States within the Si ngle Supervisory Mechanism (SSM), in 
Finland a general banking licence does not include authorisatio n to issue covered bonds. A specific 
authorisation is required, which  takes the form of an extension  to the general banking licence9.  
3.5 The draft law implements Article 19 of Directive (EU) 2019/ 2162, which requires permission for a 
covered bond programme to be obtained before issuing covered bo nds under it, and introduces 
licensing requirements for issuance of covered bonds. 
3.6 For mortgage banks specifically, paragraph 8 of the draft l aw is clear that the mortgage bank licence, 
as a ‘general’ licence, also covers permission to issue covered  bonds. As in other Member States 
within the SSM where the activi ty of issuing covered bonds is c overed by a general banking licence, 
 
4  Council Regulation (EU) No 1024/2013 of 15 October 2013 conf erring specific tasks on t he European Central Bank 
concerning policies relating  to the prudential supervision of c redit institutions (OJ L 287, 29.10.2013, p. 63). 
5  Directive 2013/36/EU of the European Parliament and of the C ouncil of 26 June 2013 on access to the activity of 
credit institutions and the prud ential supervision of credit in stitutions and investment firms, amending Directive 
2002/87/EC and repealing Directiv es 2006/48/EC and 2006/49/EC ( OJ L 176, 27.6.2013, p. 338). 
6  See paragraph 3.1 of Opinion CO N/2019/1. All ECB opinions are  published on EUR-Lex. 
7  See General observations in Opinion CON/2018/37. 
8  See paragraph 3.1 o f Opinion CON/2019/1.  
9  See pages 22 and 35 of the dr aft legislative proposal.  
ECB-PUBLIC  
3 the granting of such a general licence falls within the ECB’s c ompetence, without entailing any shift 
of competences between the ECB and the NCAs, as noted in paragr aph 3.210.  
3.7 However, as regards the new  type of licensing requirements for credit institutions and deposit banks 
(i.e. those other than mortgage banks) the part of the explanat ory memorandum that addresses 
paragraph 9 of the draft law states that ‘an extension of the a uthorisation of a credit institution to 
mortgage banking activities, as i t currently stands, would be r eplaced by an authorisation procedure 
for the issue of covered bonds,  in which the authorisation auth ority would always be the financial 
supervisory authority, irrespect ive of whether the credit insti tution is directly supervised by the 
European Central Bank or not’11.  
3.8 The ECB understands that the requirement for Finanssivalvonta  (FIN-FSA, Financial Supervisory 
Authority) to grant an authorisation is intended to implement A rticle 19 of Directive (EU) 2019/2162. 
It highlights, however, that any  power granted to FIN-FSA shoul d be without prejudice to the ECB’s 
exclusive task of authorising cr edit institutions and withdrawi ng authorisations of credit institutions 
under Article 4(1)(a) of Regulat ion (EU) No 1024/2013, as noted  in paragraphs 3.2 and 3.4.   
3.9 The ECB would therefore su ggest revisiting the explanatory memorandum and the draft legislation 
based on the above clarification on the delineation of competen ces between the ECB and the NCAs. 
It should be clarified that the task of assessing the prudentia l aspects of an authorisation of an entity 
that wishes to engage in issuance of covered bonds remains with  the ECB also in relation to credit 
institutions and deposit bank s. Although the abovementioned pro visions of the draft law refer to the 
Financial Supervisory Authority in respect of authorisation to issue covered bonds within the meaning 
of Article 19 of Directive (EU) 2019/2162, it should be clarifi ed that this competence cannot replace 
the ECB’s prudential assessment, as explained above. Finally, t he ECB notes that it is up to the 
national legislator to decide whether a two-step authorisation process regarding the activity of issuing 
covered bonds is necessary or wh ether the general authorisation  to engage in the issuance of 
covered bonds should be integr ated into the general banking lic ence.  
 
This opinion will be published on EUR-Lex.  
 Done at Frankfurt am Main, 11 August 2021. 
 
[signed]  
The President of the ECB 
Christine LAGARDE 
 
10  See also the Banking Supervision webpage ‘National powers exe rcised by the ECB’ on the ECB’s website at 
www.ecb.europa.eu . 
11  See paragraph 3.5 of the Explanatory Memorandum under ‘ Bond schemes, their super vision and authorisation 
procedures’.