This sourcebook should be read together with the RCB Regulations.
Investors in regulated covered bonds may be able to take advantage of different regulatory treatments depending on what type of investor they are.
An insurer (which is not a UK Solvency II firm,4 non-directive friendly society, incoming EEA firm or an incoming Treaty firm) may benefit from increased counterparty limits under INSPRU 2.1.22R (3)(b). An insurer which is a UK Solvency II firm is subject to the rules in the PRA Rulebook which transpose the Solvency II Directive and also to Solvency II Regulation (EU) 2015/35 of 10 October 2014.4
Issuers which are subject to an obligation to publish a prospectus under the Prospectus Directive are required by Article 3 of the PD Regulation to disclose risk factors. These requirements are set out in PR 2.3.1 EU and PR App 3.1.1 EU.
In complying with these obligations, issuers should consider disclosing the risk that actions by a regulatory authority in relation to the issuer may adversely affect the ability of the issuer to meet its obligations to investors or the ability of the owner to meet its guarantee obligations to investors. An example of such action may include restricting the issuer's ability to transfer further assets to the asset pool.