The European Central Bank (ECB) has adopted a series of Decisions and Guidelines making a number of minor changes to the eligibility criteria for instruments submitted as collateral to its repo facility, to limit the eligibility of "uncovered government-guaranteed bank bonds" as collateral from 1 March 2015, and to repeal the earlier Guideline 2012/18 such that all of the temporary rules in application are contained within one Guideline from 3 May 2013.

  • Decision 2013/6 clarifies that, from 1 March 2015, the following instruments will no longer be eligible as collateral:
    • uncovered government-guaranteed bank bonds issued by either (i) a counterparty applying to access the Eurosystem's operations or (ii) an entity closely linked to that counterparty; and
    • covered bonds issued by a counterparty applying to access the Eurosystem's operations, where the asset pool contains uncovered government-guaranteed bank bonds also issued by that counterparty or an entity closely linked to that counterparty. 
  • Decision 2013/5 consolidates several of the ECB's previous Guidelines and Decisions from 3 May 2013 (namely Guidelines 2011/4, 2011/10, 2012/32 and 2012/34 on the temporary eligibility (or ineligibility) of certain foreign currency denominated instruments) and also repeals and recasts the provisions of the existing Guideline ECB/2012/18 from that date, such that the ECB's General Documentation (which is the main source of the ECB's eligibility criteria) is supplemented only by Guideline 2013/4 going forward. 
  • Guideline 2013/4 implements Decision 2013/6 as above (including the repeal of the previous measures noted above) and entirely recasts Guideline 2012/18 (which previously formed part of the General Documentation).  It also clarifies that, for the period from 3 May 2013 to 28 February 2015, eligible uncovered government-guaranteed bank bonds may only be rejected as collateral if they have been issued by the applicant counterparty and do not comply with the ECB's minimum rating threshold.

As a result, from 3 May 2013, the complete text of the ECB's eligibility criteria is helpfully contained within two key documents - the General Documentation (set out in Annex 1 to ECB Guideline 2011/14), supplemented by the new Guideline 2013/4. 

In a further Decision dated 2 May 2013 (Decision 2013/13), the ECB has suspended the application of the minimum rating threshold (currently two ratings of BBB or above, which has been in temporary application since 14 September 2012) to marketable debt instruments (including asset-backed securities) issued or guaranteed by the Cypriot Government, from 9 May 2013 until further notice.  This reflects the financial assistance programme recently implemented in Cyprus in conjunction with the International Monetary Fund.  Additional haircuts will apply to such securities depending on the instrument type and maturity.