COVERED BOND LABEL April 2014

28 

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Full text

(1)

(2)

Outline

2

Objectives, Benefits and State of Play

Label Organisation and Processes

Covered Bond Label Convention

Transparency

(3)

3

Objectives, Benefits

(4)

Covered Bond Label – Objectives

4

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

(5)

Benefits of the Covered Bond Label

5

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

(6)

Covered Bond Label – State of Play

6

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

(7)

7

Label Organisation

(8)

Governance

8

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

(9)

Covered Bond Label Committee – Role Description

9

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

(10)

Covered Bond Label Committee – Members

10

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

(11)

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)

(12)

Covered Bond Label Advisory Council – Members

12

 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

(13)

Covered Bond Label – How it works

13

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

(14)

Issuer application process in detail

14

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

(15)

15

Covered Bond

(16)

Covered Bond Label Convention

16

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)

(17)

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

17 * Including pooling models consisting only of covered bonds issued by credit institutions.

(18)

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

18 * 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.

(19)

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

19 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

(20)

20

Transparency

(21)

Covered Bond Label – Transparency Requirements

21

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)

(22)

22

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)

(23)

23

(24)

Covered Bond Label - Synergies & Potential Partnership

24

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

(25)

Covered Bond Label in Bloomberg (1/2)

(26)

Covered Bond Label in Bloomberg (2/2)

26 Since 2013

(27)

Covered Bond Label

in MTS Cash and

MTS Bondvision

27 Since May 2013

(28)

Contact details

28

Covered Bond Label Foundation

(CBLF)

Avenue de Cortenbergh, 71

B-1000 Brussels Belgium

info@coveredbondlabel.com

+32 2 285 40 33

www.coveredbondlabel.com

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