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Clifford Chance

Clifford Chance

Briefings

ECB releases first details of its covered bond purchase programme.

9 June 2009

On 7 May 2009, the Governing Council of the European Central Bank ("ECB") announced its plan to introduce a programme for the purchase of eurodenominated covered bonds issued in the euro area in a total volume of about EUR 60 bn (the "Programme").

The Programme is intended to serve as an additional measure for enhancing the liquidity of European banks in response to the continuing constrained market conditions. The details, however, have so far been subject to vivid speculation in the press and among market participants. In the absence of further information from the ECB, it was unclear which types of covered bonds would be eligible, in particular whether the Programme would only extend to "covered bank bonds" that are compliant with the requirements of article 22 (4) of the European Directive 85/611/EEC on Undertakings for Collective Investment in Transferable Securities ("UCITS"), or possibly also to certain non-UCITS-compliant structured covered bonds.

In a press release of 4 June 2009, the Governing Council of the ECB now released some details of the Programme1. This Newsletter summarises these details, gives a first brief analysis on their implications and identifies some remaining questions.

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