PRU 4.13.10

In addition to the requirements in Rule 4.13.9, where an Authorised Person has an Exposure that is protected by a guarantee or that is counter-guaranteed by a central government or Central Bank, a regional government or local authority or a PSE claims on which are treated as claims on the central government in whose jurisdiction they are established, a MDB or an international organisation to which a 0% risk weight is assigned under Section 4.12, an Authorised Person may treat the Exposure as being protected by a direct guarantee from the central government or Central Bank in question, provided the following requirements are complied with:

(a) the counter-guarantee covers all Credit Risk elements of the Exposure;
(b) both the original guarantee and the counter-guarantee comply with all the requirements for guarantees set out in this Section, except that the counter-guarantee need not be direct and explicit with respect to the original Exposure; and
(c) the Authorised Person is able to satisfy the Regulator that the cover is robust and that 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.