Requirements for other physical collateral
Physical collateral other than immovable property collateral shall qualify as eligible collateral under the IRB Approach where all the following conditions are met:
with the sole exception of permissible first priority claims referred to in Article 209(2)(b), only first liens on, or charges over, collateral shall qualify as eligible collateral and an institution shall have priority over all other lenders to the realised proceeds of the collateral;
the loan agreement shall include detailed descriptions of the collateral as well as detailed specifications of the manner and frequency of revaluation;
institutions' credit policies with regard to the transaction structure shall address the following:
appropriate collateral requirements relative to the exposure amount;
the ability to liquidate the collateral readily;
the ability to establish objectively a price or market value;
the frequency with which the value can readily be obtained, including a professional appraisal or valuation;
the volatility or a proxy of the volatility of the value of the collateral.
when conducting valuation and revaluation, institutions shall take fully into account any deterioration or obsolescence of the collateral, paying particular attention to the effects of the passage of time on fashion- or date-sensitive collateral;
institutions shall have the right to physically inspect the collateral. They shall also have in place policies and procedures addressing their exercise of the right to physical inspection;
the collateral taken as protection shall be adequately insured against the risk of damage and institutions shall have in place procedures to monitor this.