Section 2-31 Asset coverage requirement

The value of the cover pool shall at all times exceed the value of covered bonds with a preferential claim over the pool. Account shall be taken of the mortgage credit institution’s derivative contracts as mentioned in section 2-28 first paragraph e) when values are calculated. The King may in regulations lay down further requirements in regard to how such values shall be calculated. The King may in regulations lay down rules in regard to mortgage credit institutions which fail to meet the asset coverage requirement set out in the first sentence.

In an assessment of whether the requirement of the first paragraph is met, loans to the same borrower and loans secured on the same collateral cannot be included in the cover assets at more than 5 per cent of the total cover pool. The King may issue regulations providing for the inclusion of loans over and above the limit of 5 per cent where additional collateral exists, and rules governing such additional collateral.