COVERED BOND LABEL April 2014 - · PDF fileCovered Bond Label Advisory Council which acts as a...
Transcript of COVERED BOND LABEL April 2014 - · PDF fileCovered Bond Label Advisory Council which acts as a...
Outline
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Objectives, Benefits and State of Play
Label Organisation and Processes
Covered Bond Label Convention
Transparency
Covered Bond Label – Objectives
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High Standards
Regulatory
Recognition
Transparency
Liquidity
To enhance the quality, overall regulatory recognition
of and trust in the asset class
To protect / ring-fence the covered bond asset class
To identify and further develop the existing high
standards and quality features that define the product
To facilitate and improve access for investors, regulators
and other market participants to centralised,
comprehensive & up-to-date qualitative and
quantitative information
To promote liquidity and strengthen an active
secondary market
Benefits of the Covered Bond Label
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The Covered Bond Label provides major benefits on the following items:
High Standards & Market Best Practice:
Identification of a high quality segment of the covered bond market
Identification of market best practices
Harmonisation:
Exchange and implementation of market & legislative best practices
Transparency:
Facilitation and improvement of access for investors, regulators and other market
participants to centralised, comprehensive & up-to-date qualitative and
quantitative information (Covered Bond Label website:
www.coveredbondlabel.com)
Reference to the Covered Bond Label on major data platforms such as
Bloomberg.
Governance:
Large market representation within the Covered Bond Label Committee
(Representatives of 11 largest covered bond jurisdictions and 4 major investment
banks)
Covered Bond Label Advisory Council which acts as a market participants’
think thank and includes, in particular, representatives of the ECB, EBA, national
central banks, rating agencies, etc.
Covered Bond Label – State of Play
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As of February 2014, 81 labels have been granted (cover pools) to 69
issuers located in 13 different countries.
This represents more than 4000 bonds registered on the Label website
amounting to more than 1.4 trillion of Euros.
Number of Issuers Number of Labels Granted
Governance
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Label Committee Label
Secretariat
Issuers
Market
Advisory
Council
European &
National
Authorities
Sends participants
on invitation by the
Label Committee
Supervises Advises
Self-Certification
Process
Advisory Decisional Operational
Sends participants
on invitation by the
Label Committee
Ability to raise
objections or
request for
additional
information
LABEL CONVENTION
Covered Bond Label Committee – Role Description
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Covered Bond Label Committee
Role Decisional
Main
Responsibilities
and Remits
Decision-making and supervisory role in the Labelling process
Update and implementation of guidelines and procedures for the Labelling
process, including the withdrawal and appeal procedures
Setting of the annual operating budget of the CBL, including the level of
the subscription fees and the operational expenses
Approval of the annual accounts of the CBL
Convening of meetings of the Advisory Council
Preparation of an annual report on the Label activities.
Composition Members of largest covered bond jurisdictions and selected representatives
of investment banks
Meeting Frequency Quarterly
Covered Bond Label Committee – Members
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National Representatives:
Carsten Tirsbaek Madsen (DK), Chairman
Waleed El-Amir (IT), Deputy Chairman
Jens Tolckmitt (DE)
Karsten Beltoft (DK)
Antonio Torio (ES)
Sandrine Guérin (FR)
Paul O’ Connor (IE)
Luciano Chiarelli (IT)
Matthias Achilles (LU)
Jac Besuijen (NL)
Øjvind Birkeland (NO)
Katarzyna Kapeller (AT)
Ana Manuela Marques (PT)
Per Tunestam (SE)
Chris Fielding (UK)
Investment Bank Representatives: Based on Rotation Principle
Julia Hoggett, Bank of America Merrill Lynch
Torsten Elling, Barclays
Boudewijn Dierick, BNP Paribas
Mauricio Noe, Deutsche Bank
Label Advisory Council – Role Description
Label Advisory Council
Role Advisory
Main
Responsibilities and
Remits
Market participants’ think-tank
Advisory role vis-à-vis the Label Committee
Support of the deployment of the Label in the market and constructively
contribute to improvements to the Label
Provision of opinions and/or advice upon consultations conducted by the
Label Committee
Provision of a forum whereby stakeholders can exchange views on issues that
may have a direct or indirect impact on the Industry
Composition
1 observer from the European Banking Authority (EBA)
1 observer from the European Central Bank (ECB)
3 representatives of national authorities (on a rotational basis)
3 covered bond market participants
ECBC Chairman and deputy Chairman
Meeting Frequency Ad Hoc (at least once a year)
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Covered Bond Label Advisory Council – Members
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Observer Representatives:
Lars Overby, Head of Unit, Regulation, EBA
Benjamin Sahel, Head of ECB's Market Operations Analysis Division
Market Representatives: Based on Rotation Principle
Andreas Denger, Senior Portfolio Manager at Meag Munich Ergo
Asset Management GmbH
Hélène Heberlein, Managing Director, Covered bonds, Fitch Rating
Peter Voisey, Clifford Chance
National Authority Representatives:
Ángel García de Frutos, Head of Assets Management Division,
Banco de España
François Haas, Deputy General Manager, DG Operations, Banque
de France
Michal Klestinec, Senior Portfolio Manager - National Bank of
Slovakia
Covered Bond Label – How it works
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Covered
Bond
Issuer
Applies
for the
Label
Declares
compliance to
Label
Convention
Commits to
disclose
transparency
requirements
Obtains
the Label
Self certification process
Uploads
data on
Label
website
Posts
NTT on
their
website
NTT: National
Transparency
Template
Issuer application process in detail
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Application
Dedicated
National Legislation
Dual recourse
Specific public
supervision on the
Cover Pool
UCITS & CRR
compliance
Dynamic Cover
Pool
Commitment to
provide the info in
line with National
Templates Link to Issuer
website
LABEL
Legislation
safeguards
Security
Features
intrinsic to
Cover Pool
Transparency
Issuer commitment
Predefined List
(limited choice)
Document or Link to
be provided
Covered Bond Label Convention
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The 2014 Label Convention requires compliance with Article
129 of the CRR and UCITS 52(4) in addition to three
supplementary requirements:
Public supervision of the pool as well as the institution
Asset class restriction to Residential Mortgages, Public
Sector Loans and Ships
Compliance with national transparency templates which
must meet the Label transparency standards (see Annex I
of the Label Convention)
a) The CB programme is embedded in a dedicated national
CB legislation;
b) The bond is issued by - or bondholders otherwise have full
recourse, direct or indirect*, to - a credit institution which is
subject to public regulation and supervision;
c) The obligations of the credit institution in respect of the
cover pool are supervised by public supervisory
authorities.
Label Convention - Legislation Safeguards
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* Including pooling models consisting only of covered bonds issued by credit institutions.
a) Bondholders have a dual claim against: i. The issuing credit institution as referred to in point I b);
ii. A cover pool of financial assets * (mortgage, public sector and ship assets), ranking
senior to the unsecured creditors.
b) The credit institution has the ongoing obligation to maintain sufficient
assets in the cover pool to satisfy the claims of covered bondholders at all
times.
c) Issuers are committed to providing regular information enabling investors
to analyse the cover pool, following the guidelines developed at national
level (see Guidelines for National Transparency Templates).
Label Convention - Security Features Intrinsic
to the CB Product
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* The financial assets eligible for the cover pool (including substitution assets and derivative
instruments) and their characteristics are defined in the national covered bond legislation which
complies with the requirements of Article 52(4) of the UCITS Directive and Article 129 of the
CRR, as well as those articles which specify its implementation. A phase-in period of up to 1
year from the 1st of January 2014 is granted to issuers where the national implementation of
CRR in their home country requires a longer implementation period.
Transparency templates are developed at the national level and made available on issuers’ websites.
Individual issuers are committed to provide high quality supportive information. National templates vary in
view of the different characteristics of each market. The following list identifies key recommended
transparency items to be included where appropriate.
Annex I - Guidelines for National
Transparency Templates
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Overview
Homepage
Format
Frequency
General Information
Nominal Cover Pool Size
Overcollateralisation
Availability of historic cover pool data
Maturity of Covered Bonds
Nominal value of outstanding CBs
CRD compliant
Net present value of assets and
liabilities
Information on Currency Exposures
Information on substitution assets
Amortisation profile
Mortgage Assets
Number of loans
Loan size information
LTV information
Property type information
Geographic distribution
Is interest rate type information
available?
Repayment Type (Amortising, Interest
only, etc.)
Loan seasoning
Remaining loan maturities
NPL information and definition
Public Sector Assets
Geographic distribution
Number of loans and loan size
information
Distribution by type of debtor
Rating of obligors
Ship Assets
Number of loans
Loans size information
LTV information
Breakdown by type of ships
(container, tanker, bulk, other)
Breakdown by size of ships
Geographic breakdown by country of
registration
Loan seasoning
Remaining loan maturities
NPL information and definition
Breakdown by classification societies
Covered Bond Label – Transparency Requirements
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Asset Side
Cover Pool Information on the Issuer Website
The issuer will disclose, on its website, cover pool
information on a quarterly basis which will comply
with the National Transparency Template in use in
its relevant covered bond jurisdiction.
Cover Pool Information on the Label Website
Link to Cover Pool Information Compliant with
the National Transparency Template
Issuer
Pool Identifier
Country
Legal Framework
Pool Type (Public Sector, Mortgage, Ship
assets or Mixed)
Contact Person & Details
National Transparency
Templates
Monthly Issuance Level
Information
Covered Bond Information on the Label Website
The issuer will update, on the Label website, the
following items on (at a minimum) a monthly basis:
ISIN
Other Identifier
Initial Date of Issuance
Maturity Date
Currency
Face Value
Coupon (Fixed / Floating / Other)
Syndicated (Y/N)
Listed (Y/N)
Tapped (Y/N)
Extendable (Y/N)
Additional Information (e.g. link to Final Terms)
Liabilities Side
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Covered
Pool Data
At issuance
level in a
comparable
format
Covered Bond Label Website
Covered
Bond
Data
Displayed (on each
individual issuer’s
profile from January
2013 onwards) on the
basis of the respective
National Transparency
Template
Issuer
Information
General
information on the
issuer and contact
points at issuer
and national level
Legislative
Framework
Description of the
legislative framework of
every covered bond
model and the official
legislative text in
English (the Covered
Bond Label Foundation’s
website provides a link
to the ECBC’s
Comparative Database
which contains a wealth
of information on the
different legal
backgrounds)
Covered Bond Label - Synergies & Potential Partnership
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Label IT
Platform
ECBC
Private
Firms
Authorities
&
Regulators
ECBC Database (National Framework Information)
European Central Bank
European Securities and Markets Authority
ECBC Website (latest regulatory developments,
position papers, WGs activities, ...)
Bloomberg
Euro MTS
European Banking Authority
European Commission
European DataWarehouse
Contact details
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Covered Bond Label Foundation
(CBLF)
Avenue de Cortenbergh, 71
B-1000 Brussels Belgium
+32 2 285 40 33
www.coveredbondlabel.com