Are covered bonds HQLA?

Are covered bonds HQLA? Specifically, the EU recognises high-quality covered bonds3 and assets issued by certain EU credit institutions as Level 1 HQLA. The EU authorities have developed and implemented the necessary templates for banks

Are covered bonds HQLA?

Specifically, the EU recognises high-quality covered bonds3 and assets issued by certain EU credit institutions as Level 1 HQLA. The EU authorities have developed and implemented the necessary templates for banks to report compliance with the LCR.

Which bonds are HQLA?

95% of HQLA consist of L1 assets, with L1 government bonds amounting to €9.8 trillion (89%) and L1 covered bonds €0.7 trillion (6%).

What qualifies as HQLA?

High-quality liquid asset (HQLA) means an asset that is a level 1 liquid asset, level 2A liquid asset, or level 2B liquid asset, in accordance with the criteria set forth in § 329.20. HQLA amount means the HQLA amount as calculated under § 329.21.

What are Level 3 assets?

Level 3 assets are financial assets and liabilities that are considered to be the most illiquid and hardest to value. Examples of Level 3 assets include mortgage-backed securities (MBS), private equity shares, complex derivatives, foreign stocks, and distressed debt.

How is the Basel III Liquidity Coverage Ratio ( LCR ) effected?

The U.S. Basel III liquidity coverage ratio (LCR) rule is finalized. Learn how this ruling impacts your financial institution. The U.S. LCR rule is finalized and requires banks to maintain minimum amounts of liquid assets to withstand cash outflows over a 30-day horizon,…

When did the Basel Committee approve the LCR?

The Basel Committee issued the full text of the revised Liquidity Coverage Ratio (LCR) following endorsement on 6 January 2013 by its governing body – the Group of Central Bank Governors and Heads of Supervision (GHOS).

What was the final rule of Basel III?

The U.S. Basel III liquidity coverage ratio (LCR) rule is finalized. Learn how this ruling impacts your financial institution. The U.S. LCR rule is finalized and requires banks to maintain minimum amounts of liquid assets to withstand cash outflows over a 30-day horizon, calculated as per prescribed methodology.

What does the LCR do for a bank?

The LCR promotes the short-term resilience of a bank’s liquidity risk profile. It does this by ensuring that a bank has an adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted into cash easily and immediately in private markets to meet its liquidity needs for a 30 calendar day liquidity stress scenario.