Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) The value of assets in a cover pool must be at least 103%, or such other percentage as is prescribed by the regulations, of the face value of the covered bonds secured by the assets.
Note: An exception to this rule is set out in subsection (5).
(2) The value of assets covered by paragraph 31(1)(b) (bank accepted bills or certificates of deposit) in a cover pool must not exceed 15% of the face value of the covered bonds secured by the assets.
Note: An exception to this rule is set out in subsection (6).
(3) For the purposes of subsection (1), if the sum of:
(a) the outstanding principal amount of a loan secured by a residential property; and
(b) the outstanding principal amounts of any prior or equal ranking loans secured by the property;
exceeds 80%, or such other percentage as is prescribed by the regulations, of the value of the property (as determined by the most recent valuation of the property), then the value of the loan is reduced by the amount of the excess.
(4) For the purposes of subsection (1), if the sum of:
(a) the outstanding principal amount of a loan secured by a commercial property; and
(b) the outstanding principal amounts of any prior or equal ranking loans secured by the property;
exceeds 60%, or such other percentage as is prescribed by the regulations, of the value of the property (as determined by the most recent valuation of the property), then the value of the loan is reduced by the amount of the excess.
Exceptions
(5) Subsection (1) does not apply to the extent that compliance would be inconsistent with a direction given by APRA.
(6) Subsection (2) does not apply to the extent that compliance would be inconsistent with the need to deal with an asset to satisfy a call on security in relation to a covered bond.