(1) If asset covered securities are outstanding, or a cover assets hedge contract is in existence, in relation to a designated or formerly designated credit institution, the institution shall not create a security interest in respect of any cover assets that are comprised in a cover assets pool if the interest would, but for this Part, adversely affect the priority conferred by this Part of preferred creditors in respect of those assets. If the institution creates any such security interest, the interest is void and any money secured by it is repayable immediately.
(2) Subsection (1) does not prevent a designated or formerly designated credit institution from creating a security interest in respect of cover assets comprised in a cover assets pool maintained by the institution if -
(a) the relevant assets are located outside the State, or are financial obligations of an entity referred to in section 5 (1) (e), and
(b) the person who, directly or indirectly, has the benefit of the intere
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