Covered bonds

Objectives and key requirements of this Prudential StandardThis Prudential Standard sets out requirements for the issuing of covered bonds by authorised deposit‑taking institutions (ADIs).Ultimately, the Board of an ADI is responsible for ensuring that the ADI adopts prudent practices when issuing covered bonds and managing the risks associated with exposure to a covered bond special purpose vehicle.The key requirements of this Prudential Standard are that an authorised deposit-taking institution must:adopt policies and procedures to manage risks relating to its issuance of covered bonds; andapply an appropriate capital treatment to exposures associated with covered bond issuance.This Prudential Standard should be read in conjunction with Division 3A of Part II of the Banking Act 1959, which sets out the legislative framework for covered bonds.

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Covered bonds