On October 23, 2013, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (the “Agencies”) published a notice of proposed rulemaking addressing quantitative liquidity requirements for large domestic bank holding companies, savings and loan holding companies, depositary institutions and nonbank financial companies designated by the Financial Stability Oversight Council for Board supervision.  The notice proposes a liquidity coverage ratio for internationally active depository institutions and depository institution holding companies1 and depository institution subsidiaries that have $10 billion or more in total consolidated assets.
 
Although covered bonds are considered to be eligible assets for the liquidity coverage ratio under the Capital Requirements Directive in the European Union, covered bonds would not be eligible assets under the proposed rule.
 
Under the proposed rule, an eligible asset may not be an obligation of a regulated financial company, investment company, non-regulated fund, pension fund, investment adviser, identified company2 or any consolidated  subsidiary of the foregoing.  The definition of regulated financial company includes a foreign banking  organization. Accordingly, covered bonds would not qualify as eligible assets because they are obligations of  regulated financial companies.