Opinion of the European Central Bank of 5 April 2012 on Belgian covered bonds and on measures to facilitate the mobilisation of credit claims (CON/2012/28)
Date: 2012-04-05
Institutions: European Central Bank
Subjects: Belgium, bond, claim, credit institution, financial stability, national law, payment system

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 5 April 2012 

on Belgian covered bonds and on measures to facilitate the mobilisation of credit claims  

(CON/2012/28) 

Introduction and legal basis 

On 14 February 2012, the European Central Bank (ECB) received a request from the Nationale Bank van 

België/Banque Nationale de Belgique (NBB), acting on behalf of the Belgian Ministry of Finance, for an 

opinion on three pieces of draft legislation (hereinafter together the ‘draft legislation’) comprising: (1) a 

draft law establishing a legal framework for Belgian covered bonds (hereinafter the ‘draft law on Belgian 

covered  bonds’);  (2)  a  draft  royal  decree  on  the  issuance  of  Belgian  covered  bonds  by  Belgian  credit 

institutions (hereinafter the ‘draft royal decree’); and (3) a draft law on various measures to facilitate the 

mobilisation of claims in the financial sector (hereinafter the ‘draft law on mobilisation of credit claims’).  

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  third,  fifth  and  sixth  indents  of  Article  2(1)  of  Council 

Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions1, as the draft legislation contains provisions concerning 

the NBB, payment and settlement systems, as well as rules applicable to financial institutions insofar as 

they  materially  influence  the  stability  of  financial  institutions  and  markets.  In  accordance  with  the  first 

sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1.  

Purpose of the draft legislation 

1.1  The draft legislation aims to set up a comprehensive legal framework in Belgian law to allow for 
the  issuance  of  covered  bonds  that  comply  with  European  legislation2,  in  order  to  facilitate  the 

refinancing  of  credit  institutions,  whilst  defining  appropriate  legal  mechanisms  to  protect  the 
holders of these new debt instruments3.  

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3  

OJ L 189, 3.7.1998, p. 42.  
Directive  2009/65/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  on  the  coordination  of  laws, 
regulations  and  administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities 
(OJ L 302. 17.11.2009, p. 32) and Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 
relating to the taking up and pursuit of the business of credit institutions (OJ L 177, 30.6.2006, p. 1). 
Explanatory memorandum to the draft law on Belgian covered bonds, p. 1. 

 
 
 
 
                                                 
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1.2  The  draft  law  on  Belgian  covered  bonds  defines:  (a)  the  institutions  allowed  to  issue  Belgian 
covered bonds, i.e. all credit institutions incorporated in Belgium4 and the additional authorisation 
requirements to carry out such activity5; (b) the types of assets eligible for inclusion in the cover 
pool of Belgian covered bonds6, as well as the rules governing the valuation and composition of the 

cover  pool;  (c)  the  nature  of  the  cover pool  as  a  separate  pool  of  assets  of  the  issuer,  segregated 

from its general, assets but without separate legal personality and remaining on the issuer’s balance 
sheet and set aside exclusively for the reimbursement of the holders of Belgian covered bonds7; and 

(d) the regime for managing that separate pool of assets, the conditions for appointing a portfolio 
manager  and  their  powers8.  Furthermore,  the  draft  law  on  Belgian  covered  bonds  addresses  the 
consequences of the opening of an insolvency procedure with respect to the covered bonds issuer9, 

notably with regard to the rights of the covered bond holders and their preferential treatment. In the 

event of the issuer’s insolvency, the covered bond holders are to have a claim to the proceeds of the 

realisation  of  the  cover  pool  assets  in  priority  to  all  creditors  of  the  issuing  credit  institution, 
whether secured or unsecured10.  

Further  provisions  in  relation  to  the  cover  pool  assets  are  set  out  in  the  draft  royal  decree11.  The 

draft royal decree also contains specific provisions concerning the register of cover pool assets, the 

NBB’s power to impose a limit on the volume of covered bonds that may be issued by a specific 
institution, and the tasks of the portfolio monitor12. 

Finally, the draft law on the mobilisation of credit claims addresses some technical legal issues in 
order to make it possible, in practice, to mobilise a sufficient volume of credit claims13. 

2.   General observations 

2.1  The ECB welcomes the draft legislation, as it will enable credit institutions to issue covered bonds 

that  are  attractive  to  a  wide  range  of  investors  and  expand  their  ability  to  use  credit  claims  as 

collateral, thereby enhancing access to sources of refinancing by credit institutions.  

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The  draft  law  on  Belgian  covered  bonds  will  be  inserted  into  the  Belgian  Law  of  22  March  1993  on  the  status  and 
supervision of credit institutions (hereinafter ‘the Law of 22 March 1993’), within title II “Credit institutions incorporated 
under Belgian law”. 
New Articles 64/2 to 64/5, 64/21 and 64/22 of the Law of 22 March 1993. 
Notably, mortgage claims and claims on public sector entities (new Article 64/3§3 of the Law of 22 March 1993). 
New Articles 64/8§1 and 64/11 of the Law of 22 March 1993. 
New Articles 64/12 to 64/15 of the Law of 22 March 1993. 
New Article 64/16 of the Law of 22 March 1993. 
New Article 64/11, of the Law of 22 March 1993, especially the second subparagraph. 
Notably, these provisions concern: additional requirements for cover assets, conditions for including hedging instruments 
in the cover pool, the composition and valuation of cover assets, the liquidity of the cover pool (Articles 3 to 7).  
Articles 9 to 11 of the draft royal decree. 
See the explanatory memorandum to the draft law on the mobilisation of credit claims, p. 3. This includes measures such 
as  removing  restrictions  for  pledging  and  transferring  claims  on  the  adjudicating  body  arising  from  the  public 
procurement  legislation  (proposed  Article  3);  disapplying certain  requirements  to  third  party  enforceability  of  a  set-off 
(proposed Article 6); in the context of Belgian covered bonds, protecting the transfer of claims against the insolvency of 
the  transferor  (proposed  Article  8);  ensuring  ranking  agreements  concerning  mortgage  claims  are  automatically 
enforceable on third parties(proposed Articles 11 to 17), etc. 

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2.2  The  draft  law  on  covered  bonds  provides  that  credit  institutions  may  pledge  their  own  covered 

bonds (i.e. covered bonds that they have issued themselves) as collateral for the intraday credit and 

monetary  policy  credit operations  of  the  NBB,  in  accordance  with  the  procedures  and  conditions 
determined  by  the  NBB14.  The  draft  law  further  provides  that  a  credit  institution  may  maintain 
minimum reserves for each separate pool of assets with the NBB15.  

2.3  The  ECB  emphasises  that  it  lies  within  the  Eurosystem’s  exclusive  competence  to  decide  what 

collateral  and  which  counterparties  to  accept  for  its  monetary  policy  operations,  as  well  as  to 

determine  how  minimum  reserves  are  to  be  held  by  credit  institutions  with  the  relevant  national 
central bank16.  

The  ECB  understands  that  the  reference  in  the  draft  legislation  to  the  eligibility  of  own  covered 
bonds as collateral17 is exclusively aimed at maximising legal certainty with regard to the validity 
of the acquisition and holding of own securities under Belgian company law18. Hence, it does not 

appear  necessary  to  specify  the  purpose  for  which  such  own  covered  bonds  can  be  subscribed, 

acquired  or  held  (i.e.  ‘notably  to  pledge  them  as  collateral  in  NBB  credit  operations’).  This 

specification should ideally be deleted to avoid any misinterpretation regarding the exclusive nature 

of the Eurosystem’s competence.  

The ECB understands that the draft legislation does not affect the minimum reserve requirements 

of  individual  credit  institutions  as  imposed  by  the  Eurosystem,  but  solely  lays  down  an 

implementation  rule  at  the  national  level,  allowing  an  individual  credit  institution  to  divide  the 
minimum reserves it is required to hold with the NBB between different accounts19. However, to 

fully  respect  the  exclusive  Eurosystem’s  competence  in  this  field,  this  provision  should  not  be 

specified  by  the  national  legislator  but  should  be  left  to  the  NBB’s  discretion,  subject  to  the 

requirements defined by the Eurosystem.  

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 5 April 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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19  

New Article 64/17§1 of the Law of 22 March 1993. 
New Article 64/17§3 of the Law of 22 March 1993.  
See in this respect also ECB Opinion CON/2010/47, paragraph 2.3.  
New Article 64/17§1 of the Law of 22 March 1993.  
Explanatory memorandum to the draft law on Belgian covered bonds, p. 35. 
New Article 64/17§3 of the Law of 22 March 1993.  

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