On 1 January 2015 the enhanced Dutch covered bond legislation will enter into force. As a result, Dutch registered covered bonds will have a more firm statutory basis in the Act on the Financial Supervision (Wet op het financieel toezicht) and issuing banks will become subject to more extensive supervision. The new Dutch covered bond legislation is in line with the findings of the European Banking Authority as set forth in its opinion and report on preferential capital treatment of covered bonds, dated 1 July 2014. It is expected that, following the new legislation, issuing and investing in Dutch covered bonds will become more appealing.

The new Dutch covered bond legislation includes rules on, inter alia, transparency, overcollateralisation and liquidity buffers. Pursuant to the transparency rules, issuing banks will need to choose one type of assets included in the cover pool, which can be either residential mortgage loans, commercial mortgage loans, public loans or shipping facilities. The requirements on overcollateralisation require cover assets representing at least 105 per cent. of the nominal value of the covered bonds. In addition, the value of cover assets should be determined in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 (CRR), including,inter alia, a maximum loan to value (LTV) of 80 per cent. for residential mortgage loans, and the total value of the cover assets, so determined, should at least be equal to the nominal value of the covered bonds. Also, under the new legislation issuing banks are required to maintain certain liquidity buffers to satisfy any shortfall in interest and principal payments for a period of six months. This requirement does not apply to soft bullet transaction with an extension period of 6 months or more and conditional pass-through structures.