ECB Changes Collateral Rules for Banks Starting November 30

The European Central Bank has announced changes to its rules for what assets banks can use as collateral from November 30. The new rules will affect how the Eurosystem assesses assets provided by banks, including bonds and other private-sector assets.

According to the ECB, they will now use the second-best available rating instead of the best rating to determine eligibility and the applicable haircut for numerous private assets. If there is only one eligible rating or all ratings come from the same agency, it will be adjusted downward by one notch under the new methodology.

The ECB is also updating the haircut schedule and introducing more granular treatment for loans, including based on how the principal is repaid over the life of the loan. Loans in which the principal is gradually reduced over the life of the contract are treated separately from those in which a larger proportion remains to be repaid later or at the end.

The changes may affect whether certain assets can be accepted as collateral and the amount of credit they can support, but do not change interest rates. The new rules will apply from November 30, 2026, and modify the collateral mechanism for monetary policy operations.