Banking Act 1959

Part II - Provisions relating to the carrying on of banking business  

Division 3A - Covered bonds  

SECTION 31   Assets that may be in cover pools  

(1)    
An asset in a cover pool must be one of the following:

(a) an at call deposit held with an ADI and convertible into cash within 2 business days;

(b) a bank accepted bill or certificate of deposit that:

(i) matures within 100 days; and

(ii) is eligible for repurchase transactions with the Reserve Bank; and

(iii) was not issued by the ADI that issued the covered bonds secured by the assets in the cover pool;

(c) a bond, note, debenture or other instrument issued or guaranteed by the Commonwealth, a State or a Territory;

(d) a loan secured by a mortgage, charge or other security interest over residential property in Australia;

(e) a loan secured by a mortgage, charge or other security interest over commercial property in Australia;

(f) a mortgage insurance policy or other asset related to a loan covered by paragraph (d) or (e);

(g) a contractual right relating to the holding or management of another asset in the cover pool;

(h) a derivative held for one or more of the following purposes:

(i) to protect the value of another asset in the cover pool;

(ii) to hedge risks in relation to another asset in the cover pool;

(iii) to hedge risks in relation to liabilities secured by the assets in the cover pool;

(i) an asset of a kind prescribed by the regulations for the purposes of this paragraph.

(2)    
Paragraph (1)(i) is not limited by paragraphs (1)(a) to (h).

(3)    
Despite subsection (1), a cover pool must not contain an asset of a kind prescribed by the regulations for the purposes of this subsection.