Obbligazioni Bancarie Garantite - OBG - Italy

1	What type of assets may be included in the cover pool?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Exposures to public sector entities x x Exposures to credit institutions x x Residential mortgage loans x x Commercial mortgage loans x x Ship loans x x Exposures to multilateral development banks x x Derivatives x x Liquid assets eligible for liquidity buffer x x High-quality liquid assets pursuant to the delegated regulation n. 2015/61; short-term exposures with matuity until 90 days to credit institutions that qualify for CQS 1 or 2 or short-term deposits to credit institutions that qualify for CQS 1, 2 or 3.
2	What is the geographical scope of assets?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Domestic x x x Multilateral development banks x x EU x x x EEA x x x UK x x CH x x x Australia x x Canada x x Japan x x New Zealand x x USA x x OECD x x G10 x x All the assets pursuant to art. 129 (1) of CRR are eligible, if specific requirements are met (consequently, both EU and third-country public sector entities exposures are potentially eligible). If the eligible assets are guaranteed by collateral, this should be located in EU, EEA or CH.
3	Is there a maximum level for substitute assets in the statutory national framework?	Yes, please specifiy Substitution of eligible assets with other assets of the same kind is permitted if this is expressly set out in the issuance programme and term sheet. Supplementation is permitted solely to maintain coverage and/or liquidity requirements provided by national law and by the art. 129 of CRR.
4	Are there any reporting requirements for covered bond issuers to investors?	Yes, by law and in line with art. 14 of EU Covered Bond Directive The national law established a minimum set of information for investors, compliant with the CB Directive. Moreover, the disclosure can be also fulfilled through the publication of the ECBC Harmonised Transparency Templates (HTT), if they contain at least the information required by the law.
5	What is the frequency of reporting to investors?	Quarterly

1	What is the basis for property valuation	Market value
2	Is a regular update of the property value required?	Yes, new external physical apraisal within a specific time span Yes, automated / indexed valuation sufficient
3	What are the LTV limits (single asset based)? Please specify in %/n.a.	Residential Commercial Ships Residential: 80%; Commercial: 60 or 70%; Ships: 60%. Comment: The same LTV limits provided by the art. 129 of CRR.
4	Are loans in excess of LTV limits eligible for inclusion in the cover pool?	No (hard limit)

IV.1 Derivative contracts in the cover pool

1	Are derivative contracts eligible for the inclusion in the cover pool?	Yes, exclusively for hedging purposes (by law)
2	Are there requirements for derivative contracts (e.g. eligibility criteria for hedging counterparties)?	Yes, specified in law
3	Will derivative contracts remain in case of insolvency of the issuer?	Yes
4	If derivatives are permitted in the cover pool, what is their ranking?	Pari passu to covered bond holders

IV.2 Exposure to market risk

1	What is the primary method for the mitigation of market risk?	Natural' matching (i.e. match funding, matching without the use of off-balance sheet instruments) and stress testing
2	Are there mitigating provisions for interest rate risk?	No
3	Are there mitigating provisions for foreign exchange risk?	No
4	Are there mitigating provisions for maturity mismatch risk?	Yes, by legislation/regulation Active Portfolio Management and ALM techniques aiming to assure the matching between assets and liabilities' maturities
5	What type of coverage test is applied?	Nominal cover Other, please specify Other: Net present value; Interest coverage test
6	Are there stress scenarios applied?	Yes, other The portfolio is weighted for taking in account payment holidays, arrears, etc.

IV.3 Liquidity risk

1	Is exposure to liquidity risk mitigated?	Yes, both by law and contractual
2	What liquidity risk mitigation requirements are in place (principal)?	180 days liquidity provisions Maturity extension provisions Contractual pre-maturity test
3	What liquidity risk mitigation requirements are in place (interest)?	180 days liquidity provisions Maturity extension provisions Reserve fund requirements Reserve fund requirements are usually required by the rating agencies
4	What is the consequence of not fixing a breach of liquidity risk mitigants?	No sale of assets No new covered bond issuance Administrative penalty
5	If 180 days liquidity provisions are in place, what types of liquid assets are eligible	LCR Level 1 LCR Level 2a LCR Level 2b Short term exposures to credit institutions (Credit Quality Step (CQS) 1) Short term exposures to credit institutions (CQS 2) Short term deposits to credit institutions (CQS 1) Short term deposits to credit institutions (CQS 2) Short term deposits to credit institutions (CQS 3)
6	If 180 days liquidity provisions are in place, the calculation of principal is based on:	The (extended) legal final maturity date

IV.4. Maturity extension

1	Is maturity extension allowed by national law?	Yes, but optional and subject to conditions
2	Is it possible to issue…	Hard bullet Soft bullet Conditional pass-through
3	Which trigger plays a role for maturity extension according to law - independent or alone or in combination?	Issuer bankruptcy/resolution Issuer failure to pay Other Other: Early intervention measures defined by the Italian Consolidaded Law on Banking
4	Does any competent authority need to give its okay (or non-opposition)?	No Bank issuing covered bonds must promptly inform the Bank of Italy about the triggers occurred (within 10 days)

IV.5 Overcollateralisation

1

Is mandatory overcollateralisation required in the law ?

Covered bond CRR compliant - 5% - Nominal The overcollateralisation is a mandatory law requirement for covered bonds which use the label "European Covered Bond (Premium)". In this case, the national law refers to the percentage floor of 5% indicated in the CRR. The OC is required also under contractual obligation and/or rating agencies.

V.1 Cover pool monitor (CPM)

1	Is there a cover pool monitor in addition to national competent authorities in the statutory law?	Yes, by law and in line with Article 13 of EU Covered Bond Directive
2	Is the CPM separate from the issuing credit institution?	Yes, required by national statutory law The CPM must inform the issuer and the Bank of Italy about the outcomes of its controls submitting an annual report.
3	Is the appointment, dismissal, eligibility criteria and the role of the CPM regulated by the national statutory law?	Yes

V.2 Banking supervision

1	Which are the national competent authorities designated to carry out covered bonds public supervision in the law?	Bank of Italy - Website
2	Is a special permission required for a covered bond programme according to national law?	Yes, licence for institution + competent autority The Bank of Italy grants or denies the authorisation within 90 days from the application. A different notification process regards the issuances under CB programmes established prior the new framework.
3	Is there a covered bond issuance limit in law or regulation? If yes, please specify	Yes Eligible assets may be assigned are subjected to internal operating limits set by the issuer, in copliance with the issuer's internal policies
4	Does the national statutory law provide for the appointment of a dedicated cover pool administrator in case of insolvency/resolution (transfer included acc. to BRRD [Bank Recovery and Resolution Directive])?	No
5	Which is the typical frequency in the national statutory law of reporting from the covered bond issuers to the designated competent authorities?	Other The CPM must inform the Bank of Italy and the issuer at least on annual basis about the outcomes of its controls

1	Does the national statutory law meet the requirements laid down in the EU Covered Bond Directive?	Yes
2	Does the statutory law meet the requirements of Article 129 of CRR [Capital Requirement Regulation]? In this case, please specify the collateral types meeting the Art. 129 CRR.	Yes All the assets of art. 129, paragraph 1, CRR
3	Does the statutory law allow covered bonds out of the scope of Art 129 of CRR? In this case, please specify the collateral	No
4	Are listed covered bonds eligible in repo transactions with the national central bank?	Yes

Primary Legislation

• Aggiornamento_n.42_del_30_marzo_2023.pdf (Original language)
• Dlgs 190_2021.pdf (Original language)

Hypostat

• Italy.pdf (English language)

Fact Book

• 3.22 Italy.pdf (English language)

Intro CB Video

Any further comments/information?