Article 214
Sovereign and other public sector counter-guarantees
1. Institutions may treat the exposures referred to in paragraph 2 as protected by a guarantee provided by the entities listed in that paragraph, provided all the following conditions are satisfied:
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(a) |
the counter-guarantee covers all credit risk elements of the claim; |
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(b) |
both the original guarantee and the counter-guarantee meet the requirements for guarantees set out in Articles 213 and 215(1), except that the counter-guarantee need not be direct; |
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(c) |
the cover is robust and nothing in the historical evidence suggests that the coverage of the counter-guarantee is less than effectively equivalent to that of a direct guarantee by the entity in question. |
2. The treatment set out in paragraph 1 shall apply to exposures protected by a guarantee which is counter-guaranteed by any of the following entities:
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(a) |
a central government or central bank; |
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(b) |
a regional government or local authority; |
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(c) |
a public sector entity, claims on which are treated as claims on the central government in accordance with Article 116(4); |
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(d) |
a multilateral development bank or an international organisation, to which a 0 % risk weight is assigned under or by virtue of Articles 117(2) and 118 respectively; |
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(e) |
a public sector entity, claims on which are treated in accordance with Article 116(1) and (2). |
3. Institutions shall apply the treatment set out in paragraph 1 also to an exposure which is not counter-guaranteed by any entity listed in paragraph 2 where that exposure's counter-guarantee is in turn directly guaranteed by one of those entities and the conditions listed in paragraph 1 are satisfied.