Sovereign and other public sector counter-guarantees
Institutions may treat the exposures referred to in paragraph 2 as protected by a guarantee provided by the entities listed in that paragraph, provided that all the following conditions are satisfied:
the counter-guarantee covers all credit risk elements of the claim;
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;
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.
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:
a central government or a central bank;
a regional government or a local authority;
a public sector entity, claims on which are treated as claims on the central government in accordance with Article 116(4);
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;
a public sector entity, claims on which are treated in accordance with Article 116(1) and (2).