Collateral rules introduce second-best rating for private assets
Amended Eurosystem collateral guidelines will take effect on November 30, 2026, establishing second-best rating requirements for private sector assets and updating valuation haircuts.
Stricter ratings and granular haircuts
The amended guidelines require the Eurosystem to use the second-best rating from external credit assessment institutions to determine collateral eligibility and valuation haircuts for private sector assets.
This standard covers unsecured bank bonds, covered bank bonds, non-financial corporate securities and non-euro area public sector debt, while euro area public sector assets retain the first-best rating rule.
In addition, the revised risk control framework updates the haircut schedule by refining deductions for own-used or retained assets and incorporating the amortisation structure of individual credit claims to improve risk equivalence across pledged assets.
Corporate alignment and temporary roll-off
The changes formalize decisions taken by the Governing Council across 2025 and 2026.
Under the new rules, financial subsidiaries of non-financial corporate groups move into haircut category III, aligning their treatment with parent companies and subjecting them to the collateral framework's climate factor.
Meanwhile, credit claims with COVID-19-related public guarantees will lose eligibility at the end of 2026.
Guidelines ECB/2026/26 and ECB/2026/27 amend existing legal acts ECB/2014/60 and ECB/2015/35.
Technical cleanup with real bite
Adopting the second-best rating rule eliminates reliance on single generous agency assessments for private debt.
The revised haircut schedules and expiring pandemic exemptions force banks into more realistic risk management.
Borrowers relying heavily on retained assets or corporate financing arms will face tighter collateral capacity.