ECBC Response to the EBA’s Advice on the Review of the EU Covered Bond Framework
The European Covered Bond Council (ECBC) welcomes the publication of the European Banking Authority (EBA)’s Advice on the Review of the EU Covered Bond Framework, which further highlights the strategic importance of this asset class within the European financial system and the Capital Markets Union. The market supports regulatory stability and simplification and recognises the Covered Bond Directive (CBD)’s effectiveness in reinforcing the resilience, attractiveness, and integration of the European covered bond framework.
Following the publication of the EBA’s Advice, the ECBC Steering Committee mandated its working groups to conduct a two-fold assessment. This resulted in the combination of a detailed market analysis of the EBA’s Advice and its potential implications for the European covered bond market with a comparative analysis of selected extra-EU covered bond frameworks against the CBD and the EBA recommendations, consolidating the views of all key stakeholders across the covered bond ecosystem.
Representing the full ECBC membership and bringing together more than 1,200 market experts across issuers, investors, lenders, rating agencies and system providers, this extensive consultation process reaffirms the CBD as a well-performing, principle-based framework that successfully reconciles harmonisation with flexibility, and warns against premature or overly prescriptive amendments that could undermine its efficiency, constrain innovation and weaken the global competitiveness of the European covered bond product.
ECBC Response to the EBA’s Advice
The first ECBC strand of analysis was carried out with the aim of consolidating market views, evaluating the effectiveness of the current legislative framework and analysing the possible implications of the EBA recommendations. The ECBC Response to the EBA’s Advice delivers therefore an extensive assessment on the legislative state of play and an impact evaluation on the proposed alterations, with deeper dives addressing the core sections of the EBA’s Advice:
- Cover assets
- Derivative contracts in the cover pool
- Coverage requirements
- Third country equivalence regime
- Extendable maturities and liquidity requirements
- Cover asset eligibility and risk treatment under the CBD and CRR
The analysis conducted by the ECBC confirms the substantial value generated by the implementation of the CBD, which has successfully delivered on its core policy objectives, strengthening harmonisation, investor protection, market integration and financial stability, while preserving the flexibility necessary for market innovation and adaptation.
At the same time, the market highlights the importance of safeguarding the global recognition of the EU covered bond model through a well-calibrated third-country equivalence regime, underlining in parallel the strategic potential of European Secured Notes (ESNs) as a complementary legislative instrument capable of supporting SME financing and contributing to Europe’s competitiveness, resilience and economic transition.
Comparative Analysis on extra-EU covered bond frameworks, CBD and EBA’s recommendations
With a view of mapping the legislative state of play and ensuring the global recognition of the EU covered bond model, the Global Issues Working Group of the ECBC conducted a comparative analysis of key extra-EU covered bond frameworks against the CBD and the EBA’s recommendations.
The exercise, covering Australia, Canada, New Zealand, Singapore, South Korea, Switzerland and the United Kingdom, enabled the ECBC to outline and understand the current status quo in the different jurisdictions and to develop a clear overview of the level of alignment between those markets and the EU covered bond framework.
The comparative analysis thus further confirmed the positive role played by the CBD, not only in transforming previously fragmented national frameworks into a coherent European ecosystem, but in providing an international benchmark driving convergence in legal frameworks, supervisory standards and market practices far beyond the European Union.
Commenting on this, EMF-ECBC Secretary General, Luca Bertalot said:
“Covered bonds represent a global success story and a core pillar of financial stability. Their resilience across financial cycles reflects the strength of the dual-recourse model, robust asset segregation, high-quality collateral, and strong supervisory frameworks. In Europe in particular, the Covered Bond Directive has become a legislative benchmark, combining market discipline with regulatory convergence and investor confidence. More broadly, covered bonds support the real economy by providing banks with long-term, cost-efficient funding for mortgage and public-sector lending. They help stabilise housing finance, broaden investor participation, and reduce reliance on more volatile sources of funding.”
Contact:
Luca Bertalot
Secretary General
Tel: +32 2 285 40 35