Government Approves Drafting of Asset Covered Securities (Amendment) Bill
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From: Department of Finance
- Published on: 9 June 2026
- Last updated on: 9 June 2026
The Tánaiste and Minister for Finance, Simon Harris TD, this morning (Tuesday) received agreement from his Cabinet colleagues to approve the drafting of the Asset Covered Securities (Amendment) Bill, the main purpose of which is to update the legislation governing the issuing of asset covered securities (covered bonds) in Ireland.
The legislation will provide for a universal banking model as an alternative to the current specialist banking model. This will allow banks to issue asset covered securities without the need, as at present, to establish and maintain a specialist subsidiary for that purpose. This will simplify the framework and reduce costs.
It will also ensure that the framework is more accommodating of issuers who may wish to issue a programme of specifically “green” securities.
Speaking today, Tánaiste Simon Harris said:
“I welcome the publication of the Heads of the Asset Covered Securities (Amendment) Bill. The publication of these Heads is in line with the Programme for Government commitment to simplify and modernise our regulatory framework to ensure Ireland remains competitive within the EU and globally facilitating continued investment”
Notes to the Editor
Asset covered securities (ACS) are highly-regulated bonds issued by designated credit institutions that are backed by a ring-fenced pool of high quality assets (mortgage assets (commercial or residential) or public sector loans (e.g. sovereign bonds)).
The holders of the bonds have a claim against both the issuing bank and the related cover assets pool. As the cover assets pool is subject to independent monitoring and must always be worth more than the securities it backs, covered bonds are considered very safe assets.
Covered bonds are not only a particularly safe investment instrument, but they are also a cost-efficient funding instrument for banks, supporting the supply of credit to the mortgage market. They have a long history of use across European countries.
One of the features of the original 2001 legislation was that it followed a “specialist banking model”, meaning that asset covered securities could only be issued by a bank specialising in that particular activity. What this meant, in practice, was that a bank wishing to issue ACS had to set up a specialist subsidiary in order to do so.
In the years since 2001, many European jurisdictions have moved away from the specialist banking model and have adopted instead a “universal banking model”, under which a mainstream bank can issue covered bonds directly, without the need for a specialist subsidiary.
The existing specialist banking model entails upfront and ongoing costs, as well as being structurally inefficient in terms of governance, reporting, liquidity and capital requirements.
As well as the inefficiency involved, the requirement for a specialist subsidiary is seen as a barrier to the entry of other potential issuers of ACS into the market.
The changes provided for in the General Scheme will allow a bank to choose whether to be a specialist or non-specialist ACS issuer. Specialist issuers will continue to operate largely along the existing lines while, for non-specialist issuers, the restrictions imposed by the Act will apply only to their ACS-related business activities.
A number of changes to the legislation are necessary to allow the universal banking model to work.
In addition to providing for a universal banking model, the General Scheme proposes further changes to the ACS Act, which will ensure that the framework is more accommodating of ACS issuers who may wish to issue a programme of specifically “green” ACS.
They will allow an institution to apply for permission for a covered bond programme with a dedicated cover assets pool of green assets. This was one of the commitments made under the “Ireland for Finance” strategy action plan 2024.
The Department engaged with stakeholders including industry representatives, experts in the area of covered bonds, and the Central Bank of Ireland to inform the policy positions given effect by the General Scheme. Further engagement was also undertaken with the Office of the Attorney General.
Next steps
The Tánaiste and Minister for Finance will write to the Chair of the Committee on Finance, Public Expenditure, Public Service Reform and Digitalisation and the Taoiseach regarding pre-legislative scrutiny. Officials will engage with the Office of the Parliamentary Counsel to the Government to begin drafting the legislation on the basis of the General Scheme published today.
ENDS