The European Banking Authority (EBA) has excluded covered bonds from assets it has recommended should be eligible as extremely high quality liquid assets for Liquidity Coverage Ratio (LCR) purposes in a report to the European Commission.

The EBA on 20 December published its final recommendations on the Liquidity Coverage Ratio (LCR), which exclude covered bonds from Level 1 status. Crédit Agricole CIB’s Florian Eichert takes a closer look at the potential implications, and sees investor behaviour only really changing in response to a lower minimum rating criterion.