COVERED BOND LABEL April 2014

Transcription

1 COVERED BOND LABEL April 2014

2 Outline Objectives, Benefits and State of Play Label Organisation and Processes Covered Bond Label Convention Transparency 2

3 Objectives, Benefits & State of Play 3

4 Covered Bond Label Objectives Regulatory Recognition To enhance the quality, overall regulatory recognition of and trust in the asset class To protect / ring-fence the covered bond asset class High Standards To identify and further develop the existing high standards and quality features that define the product Transparency To facilitate and improve access for investors, regulators and other market participants to centralised, comprehensive & up-to-date qualitative and quantitative information Liquidity To promote liquidity and strengthen an active secondary market 4

5 Benefits of the Covered Bond Label 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: 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. 5

6 Covered Bond Label State of Play 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 Labels Granted Number of Issuers 6

7 Label Organisation & Processes 7

8 Governance Advisory Decisional Operational Market LABEL CONVENTION Sends participants on invitation by the Label Committee Advisory Council Advises Label Committee Supervises Label Secretariat Sends participants on invitation by the Label Committee European & National Authorities Ability to raise objections or request for additional information Self-Certification Process Issuers 8

9 Covered Bond Label Committee Role Description 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 Meeting Frequency Members of largest covered bond jurisdictions and selected representatives of investment banks Quarterly 9

10 Covered Bond Label Committee Members 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 10

11 Label Advisory Council Role Description Label Advisory Council Role Advisory Main Responsibilities and Remits Composition Meeting Frequency 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 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 Ad Hoc (at least once a year) 11

12 Covered Bond Label Advisory Council Members 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 12

13 Covered Bond Label How it works Uploads data on Label website Declares compliance to Label Convention Covered Bond Issuer Applies for the Label Commits to disclose transparency requirements Obtains the Label NTT: National Transparency Template Posts NTT on their website Self certification process 13

14 Issuer application process in detail Application Legislation safeguards Dedicated National Legislation Dual recourse Specific public supervision on the Cover Pool Security Features intrinsic to Cover Pool UCITS & CRR compliance Dynamic Cover Pool Transparency Commitment to provide the info in line with National Templates Link to Issuer website LABEL Issuer commitment Predefined List (limited choice) Document or Link to be provided 14

15 Covered Bond Label Convention 15

16 Covered Bond Label Convention 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) 16

17 Label Convention - Legislation Safeguards 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. * Including pooling models consisting only of covered bonds issued by credit institutions. 17

18 Label Convention - Security Features Intrinsic to the CB Product 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). * 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. 18

19 Annex I - Guidelines for National Transparency Templates 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. 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 19

20 Transparency 20

21 Covered Bond Label Transparency Requirements 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) National Transparency Templates Contact Person & Details 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) Liabilities Side Additional Information (e.g. link to Final Terms) 21

22 Covered Bond Label Website Description of the legislative framework of every covered bond model and the official Covered Pool Data Covered Bond Data Legislative Framework 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) Displayed (on each individual issuer s profile from January 2013 onwards) on the basis of the respective National Transparency Template At issuance level in a comparable format Issuer Information General information on the issuer and contact points at issuer and national level 22

23 23

24 Covered Bond Label - Synergies & Potential Partnership ECBC Database (National Framework Information) ECBC ECBC Website (latest regulatory developments, position papers, WGs activities,...) Label IT Platform Private Firms Bloomberg European DataWarehouse Euro MTS Authorities & Regulators European Commission European Central Bank European Securities and Markets Authority European Banking Authority 24

25 Covered Bond Label in Bloomberg (1/2) 25

26 Covered Bond Label in Bloomberg (2/2) Since

27 Covered Bond Label in MTS Cash and MTS Bondvision Since May

28 Contact details Covered Bond Label Foundation (CBLF) Avenue de Cortenbergh, 71 B-1000 Brussels Belgium