SUPPLEMENTAL BASE PROSPECTUS

Transcription

1 SUPPLEMENTAL BASE PROSPECTUS AIB MORTGAGE BANK (a public unlimited company incorporated under the laws of Ireland with registration number ) 15,000,000,000 MORTGAGE COVERED SECURITIES PROGRAMME This supplemental base prospectus (Supplemental Base Prospectus) is supplemental to and should be read in conjunction with the base prospectus dated 18 June 2007 (the Base Prospectus) issued for the purposes of giving information with regard to the issue of mortgage covered securities (Securities) of AIB Mortgage Bank (the Issuer) under the 15,000,000,000 Mortgage Covered Securities Programme (the Programme) during the period of twelve months after the date of the Base Prospectus. This Supplemental Base Prospectus is issued in accordance with article 16 of Directive 2003/71/EC (the Prospectus Directive) and regulation 51 of the Prospectus (Directive 2003/71/EC) Regulations 2005 of Ireland (the Irish Prospectus Regulations) and constitutes a base prospectus supplement for the purposes of the Prospectus Directive and the Irish Prospectus Regulations. Application has been made to the Irish Financial Services Regulatory Authority as a constituent part of the Central Bank and Financial Services Authority of Ireland (the Financial Regulator), which is the competent authority in Ireland for the purposes of the Prospectus Directive and relevant implementing measures in Ireland for this Supplemental Base Prospectus to be approved (i) as a supplement to the Base Prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in Ireland, and (ii) for the purposes of any local offer within the meaning of the Investment Funds, Companies and Miscellaneous Provisions Act 2005 of Ireland. In relation to (ii) above, such approval may be given by the Financial Regulator pursuant to regulation 8(5) the Irish Prospectus Regulations. For the purposes of part 6 of the Irish Prospectus Regulations, the Issuer accepts responsibility for the information contained in this Supplemental Base Prospectus. The Issuer declares that, having taken all reasonable care to ensure that such is the case, the information in this Supplemental Base Prospectus is, to the best of the knowledge of the Issuer, in accordance with the facts, and does not omit anything likely to affect the import of such information. This declaration is included in this Supplemental Base Prospectus in compliance with item 1.2 of annex XI to Commission Regulation (EC) No. 809/2004. The date of this Supplemental Base Prospectus is 19 October 2007.

2 Upon approval of this Supplement Base Prospectus by the Financial Regulator, this Supplement Base Prospectus will be filed with the Registrar of Companies in Ireland in accordance with regulation 38(1)(b) of the Irish Prospectus Regulations. To the extent that there is any inconsistency between any statement in this Supplemental Base Prospectus and any statement in or incorporated by reference into the Base Prospectus, the statement in this Supplement Base Prospectus will prevail. Words and expressions defined in the Base Prospectus, unless otherwise defined in this Supplemental Base Prospectus or the context otherwise requires, have the same meaning when used in this Supplemental Base Prospectus. Save as set out below in this Supplemental Base Prospectus, there has been no significant change in the information contained in the Base Prospectus and no significant new matter has arisen in relation to the Issuer since 18 June 2007, the date of publication of the Base Prospectus. COMMENCEMENT OF THE ASSET COVERED SECURITIES (AMENDMENT) ACT 2007 OF IRELAND The Asset Covered Securities (Amendment) Act 2007 (the 2007 Amendment Act), other than section 30 thereof, came into operation on 31 August Section 30 of the 2007 Amendment Act relates to designated commercial mortgage credit institutions and not Institutions such as the Issuer. MAKING AND COMMENCEMENT OF NEW SECONDARY LEGISLATION UNDER THE ACS ACTS The Base Prospectus refers to powers conferred on the Financial Regulator under the ACS Acts to make secondary legislation relevant to Institutions such as the Issuer, Mortgage Covered Securities such as the Securities and the legislative code under the ACS Acts as described in the Base Prospectus. The Financial Regulator has exercised certain of such powers with effect from 31 August 2007 with respect to the matters which are described below in this Supplemental Base Prospectus. SECURITISED MORTGAGE CREDIT ASSETS CRITERIA AND RESTRICTIONS The Asset Covered Securities Act 2001 Regulatory Notice (Section 41A(4), (5) and (7)) 2007 made by the Financial Regulator (which came into operation on 31 August 2007) provides that: securitised mortgage credit assets comprised in a Pool are required to have a credit quality assessment of Credit Quality Step 1 based on their long-term or, as applicable, short-term rating from an eligible external credit assessment institution (ECAI) and the ratings mapping 2

3 (b) (c) (d) process as set out in the CRD. For the above purposes, Credit Quality Step 1 has the meaning given to it in laws implementing the CRD in Ireland (including without limitation, the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006) (the Irish CRD Code); the applicable percentage for the purposes of the provisions of the ACS Acts which permit the Financial Regulator to restrict the level of securitised mortgage credit assets comprised in a Pool to a percentage, subject to (c) below, is 20 per cent of the principal or nominal amount outstanding of the Mortgage Covered Securities issued by the Institution; prior to 31 December 2010, the restriction referred to at (b) above does not apply where the securitised mortgage credit assets representing the amount greater than the 20 per cent referred to in (b) above have a credit quality assessment by a nominated eligible ECAI which is the most favourable category of credit assessment made by the eligible ECAI in respect of covered bonds; any securitised mortgage credit asset held by an Institution outside a Pool must have a minimum credit quality assessment of Credit Quality Step 2 (within the meaning of the Irish CRD Code), based on the long-term or, as applicable, short-term rating from an eligible ECAI and the ratings mapping process as set out in the CRD. See, in particular, pages 98 to 100 of the Base Prospectus. PRUDENT MARKET VALUATIONS OF MORTGAGE CREDIT ASSETS AND RELATED PROPERTY ASSETS The Asset Covered Securities Act 2001 Regulatory Notice (Sections 41(1) and 41A(7)) 2007 (the MCA Valuation Notice) made by the Financial Regulator (which came into operation on 31 August 2007) lays down requirements in relation to the valuation basis and methodology, time of valuation and other matters related to determining the prudent market value of: (b) (c) a property asset which is residential property situated in Ireland and which secures a mortgage credit asset (other than a securitised mortgage credit asset) held by an Institution (an Irish Residential Property Asset); a mortgage credit asset (other than a securitised mortgage credit asset) which is secured on an Irish Residential Property Asset (an Irish Residential Loan); and a securitised mortgage credit asset the related property assets of which indirectly comprise (in whole or in part) residential property (whether or not located in Ireland) (a Relevant Securitised Mortgage Credit Asset), and also specifies requirements and criteria with respect to certain matters required when determining the prudent market value of Relevant Securitised Mortgage Credit Assets. 3

4 In relation to the prudent market value of Irish Residential Loans, subject as set out below under this heading, the MCA Valuation Notice sets out in all material respects the same requirements as did the Irish Residential Loan/Property Valuation Notice (the Asset Covered Securities Act, 2001 Regulatory Notice (Section 41(1)) 2004 Irish Residential Property Assets/Mortgage Credit Assets). See, in particular, pages 102 to 104 of the Base Prospectus. In addition to the times that were specified in the Irish Residential Loan/Property Valuation Notice, the MCA Valuation Notice requires an Institution to calculate the prudent market value of each Irish Residential Property Asset, where the related Irish Residential Loan is comprised in a Pool, at such intervals as are required to ensure that the Institution complies with the requirements of the CRD with respect to collateral for covered bonds in the form of loans secured by residential real estate. The MCA Valuation Notice provides that the prudent market value of Relevant Securitised Mortgage Credit Assets is an amount equal to the lesser of the three amounts which are summarized below: (i) (ii) (iii) the principal amount of the Relevant Securitised Mortgage Credit Assets, the principal amount of the underlying liens (or loans) less any liens secured on the relevant property assets and which rank senior to that held by the securitisation entity which has issued the Relevant Securitised Mortgage Credit Assets, a maximum LTV of 80 per cent. with respect to the loans underlying the Relevant Securitised Mortgage Credit Assets, in the case of (ii) and (iii) above: (I) determined on an aggregate basis having regard to the proportion which the nominal or principal amount of the Relevant Securitised Mortgage Credit Assets bear to the nominal or principal amount of the securitisation securities issued by the securitisation entity and secured on the same property assets as the Relevant Securitised Mortgage Credit Assets; (II) the ranking in terms of seniority of the Relevant Securitised Mortgage Credit Assets as against all such securitisation securities; (III) regard may be had to contracts, to which such securitisation entity is a party, the effects or purpose of which is to reduce the exposure of that securitisation entity in respect of the Relevant Securitised Mortgage Assets to fluctuations in the values of currencies concerned. Under the MCA Valuation Notice, when determining the prudent market value of a Relevant Securitised Mortgage Credit Asset: 4

5 (A) the amount referred to at (i) above is the principal or nominal amount outstanding of the Relevant Securitised Mortgage Credit Assets concerned on the date such prudent market value is determined or to be determined under the MCA Valuation Notice; (B) the amounts referred to at (ii) and (iii) above are to be determined by reference to the most recent information available to the Institution provided by or on behalf of the securitisation entity which is the issuer of the Relevant Securitised Mortgage Credit Asset and the most recent publicly available information relating to certain relevant matters. An Institution is required under the MCA Valuation Notice to calculate the prudent market value of each Relevant Securitised Mortgage Credit Asset and the other relevant amounts for that purpose referred to at (i) to (iii) above at such intervals as may be specified by the Monitor from time to time so as to ensure that the Institution can demonstrate to the satisfaction of the Monitor compliance with the principal matching requirements with respect to Cover Assets and Mortgage Covered Securities, Regulatory Overcollateralisation requirements under the ACS Acts and the Overcollateralisation Regulation and, if not so specified by the Monitor, then at intervals not exceeding 3 months. Under the MCA Valuation Notice where any sum is to be converted from one currency to another currency, the Institution is required to base such conversion on an applicable rate available on the relevant date to the Institution in the interbank market for the sum concerned. Under the MCA Valuation Notice, when determining: the prudent market value of Irish Residential Loans or Irish Residential Property Assets; or (b) the prudent market value of Relevant Securitisation Mortgage Credit Assets or the other related amounts referred to at (i) to (iii) above, an Institution is required to act in a manner consistent with requirements under the CRD applicable to collateral for covered bonds in the form of loans secured on residential real estate and that Institution. The MCA Valuation Notice repealed the Irish Residential Loan/Property Valuation Notice. The reference in condition 11(d) of the Terms and Conditions of the Securities to the Irish Residential Property Loan/Property Valuation Notice should be regarded as replaced with a reference to the MCA Valuation Notice. See, in particular, page 57, pages 80 to 81, pages 101 to 104 of the Base Prospectus. 5

6 SUBSTITUTION ASSETS ELIGIBLE FINANCIAL INSTITUTIONS The Asset Covered Securities Act 2001 (Section 6(2)) Regulations 2007 (S.I. No. 603 of 2007) (the Substitution Asset Deposit Regulations) made by the Financial Regulator (which came into effect on 31 August 2007) provide that an eligible financial institution for the purposes of a deposit comprising a substitution asset is: (i) any credit institution which is authorised in Ireland or any other EEA member state, or (ii) a bank which is authorised to receive deposits or other repayable funds from the public and is located in Australia, Canada, Japan, New Zealand, the Swiss Confederation or the United States of America, and (b) which has, from an eligible ECAI, a minimum credit quality assessment of Credit Quality Step 2 (within the meaning of the Irish CRD Code). The Substitution Asset Deposit Regulations repealed the Asset Covered Securities Act 2001 (Section 6(2)) Regulation 2002 (S.I. No. 387 of 2002). See, in particular, page 93 of the Base Prospectus. SUBSTITUTION ASSETS POOL ELIGIBILITY CRITERIA The Asset Covered Securities Act 2001 Regulatory Notice (Section 35(9B)) 2007 (the Substitution Asset Pool Eligibility Notice) made by the Financial Regulator (which came into operation on 31 August 2007) provides that the creditworthiness standards and criteria for inclusion of a substitution asset in a Pool are that the substitution asset concerned must have from an eligible ECAI: a credit quality assessment of Credit Quality Step 1 (within the meaning of the Irish CRD Code); or (b) for exposures within the EEA with maturity not exceeding 100 days, a minimum long term credit quality assessment of Credit Quality Step 2 (within the meaning of the Irish CRD Code). See, in particular, page 106 of the Base Prospectus. 6

7 VALUATION OF SUBSTITUTION ASSETS, CREDIT TRANSACTION ASSETS AND TOTAL ASSETS The Asset Covered Securities Act 2001 Regulatory Notice (Section 41(3) and (5)) 2007 (the Section 41(3)/(5) Valuation Notice) made by the Financial Regulator (which came into effect on 31 August 2007) specifies requirements in relation to the prudent market valuation of substitution assets and the value of credit transaction assets and total assets which, subject as set out below under this heading, are the same as the requirements which applied in respect of such assets under the Asset Covered Securities Act, 2001 Regulatory Notice (Section 41(3) and Section 41(5)) That regulatory notice has been repealed by the Section 41(3)/(5) Valuation Notice. Under the Section 41(3)/(5) Valuation Notice, the prudent market value of substitution assets is no longer limited to the date on which the substitution asset is included in the Business Register as it was under the former regulatory notice referred to above. See, in particular, page 105 of the Base Prospectus. DURATION FORMULAE AND CRITERIA The Asset Covered Securities Act 2001 Regulatory Notice (Sections 32(10) and 47(10)) 2007 (the Duration Regulatory Notice) made by the Financial Regulator (which came into operation on 31 August 2007) sets out the formulae and criteria for the purpose of the definition of duration contained in ACS Acts. The Duration Regulatory Notice repealed the Assets Covered Securities Act, 2001 Regulatory Notice (Section 32(10)) See pages 79, 100 and 101 of the Base Prospectus. AMENDMENT TO INTEREST RATE SENSITIVITY REQUIREMENTS The Asset Covered Securities Act 2001 (Section 91(1)) (Sensitivity to Interest Rate Changes Mortgage Credit) (Amendment) Regulations 2007 (S.I. No. 612 of 2007) made by the Financial Regulator (which came into operation on 31 August 2007) replaced the formulae to be used by Institutions in measuring sensitivity to interest rate changes specified in (and thereby amended) the schedule to the Asset Covered Securities Act, 2001 (Section 91(1) (Sensitivity to Interest Rate Changes) Regulation, 2004 (S.I. No. 416 of 2004). See, in particular, page 112 of the Base Prospectus. MONITOR TO VERIFY REGULATORY OVERCOLLATERALISATION Under the Asset Covered Securities Act 2001 (Section 61(2)) (Regulatory Overcollateralisation) Regulations 2007 (S.I. No. 606 of 2007) made by the Financial Regulator (which came into operation on 7

8 31 August 2007) a Monitor appointed in respect of an Institution is required to take reasonable steps to verify that the Institution will be in compliance with its obligation to maintain Regulatory Overcollateralisation before the Institution issues Mortgage Covered Securities or enters into a cover assets hedge contract. See, in particular, pages 83, 100 and 111 of the Base Prospectus. TECHNICAL AMENDMENT TO THE OVERCOLLATERALISATION REGULATION The Asset Covered Securities Act 2001 (Section 61(1), (2) and (3)) (Overcollateralisation) (Amendment) Regulations 2007 (S.I. No. 607 of 2007) made by the Financial Regulator (which came into operation on 31 August 2007) provide for technical amendment to the Overcollateralisation Regulation in relation to the meaning of prudent market value for the purposes of Overcollateralisation Regulation. See, in particular, pages 80, 81, 104, 111 and 113 of the Base Prospectus. MONITORS TO MONITOR REGISTER OF POOL HEDGE COLLATERAL The Asset Covered Securities Act 2001 (Section 61(1)) Regulations 2007 (S.I. No. 605 of 2007) made by the Financial Regulator (which came into operation on 31 August 2007) provides that a Monitor appointed in respect of an Institution is responsible for monitoring the Institution s compliance with the obligation of the Institution under the ACS Acts to include certain particulars in the register of Pool Hedge Collateral. See, in particular, page 108 of the Base Prospectus. REQUIREMENTS IN RELATION TO REGISTER OF POOL HEDGE COLLATERAL The Asset Covered Securities Act 2001 Regulatory Notice (Section 30(15) and 45(15)) 2007 made by the Financial Regulator (which came into operation on 31 August 2007) provides that: the register of Pool Hedge Collateral must contain particulars detailing, in respect of any Pool Hedge Collateral, the cover assets hedge contract(s) for which such Pool Hedge Collateral has been provided; and (b) an Institution must maintain the register of Pool Hedge Collateral at the registered office or head office of the Institution or at such other office as has been notified to the Financial Regulator in writing, and in any event must maintain such register at an office located in Ireland. 8

9 CREDIT TRANSACTIONS ASSETS ELIGIBLE FINANCIAL INSTITUTIONS The Asset Covered Securities Act 2001 (Section 27(4)) Regulations, 2007 (S.I. No. 601 of 2007) (the CTA Eligible Financial Institution Regulations) made by the Financial Regulator (which came into operation on 31 August 2007) designate the type of eligible financial institutions, deposits with which, qualify as credit transaction assets. Eligible financial institutions for this purpose are the same as those that apply in respect of deposits comprising substitution assets under the Substitution Asset Deposit Regulations, (see Substitution assets - eligible financial institutions above) save that such financial institutions are required under the CTA Eligible Financial Institution Regulations to have a credit quality assessment of Credit Quality Step 3 (as opposed to a minimum Credit Quality Step 2) (both having the meaning given to them in the Irish CRD Code). The CTA Eligible Financial Institution Regulations repealed the Asset Covered Securities Act, 2001(Section 27(4)) Regulation, 2004 (S.I. No. 417 of 2004). See, in particular, page 94 of the Base Prospectus. UPDATE OF COVER-ASSETS MONITOR AGREEMENT The Issuer intends to amend and restate the Cover-Assets Monitor Agreement with Mazars to take account of the making and coming into operation of the 2007 Amendment Act and the secondary legislation as referred to in the Base Prospectus and this Supplemental Base Prospectus. See page 110 of the Base Prospectus. WITHDRAWAL RIGHT Any person who may wish to exercise any right arising pursuant to article 16(2) of the Prospectus Directive as a result of the publication of this Supplemental Base Prospectus must exercise that right on or before 5.30p.m. (Dublin time) on 24 October