2017/2005(INI) | [ParlTrack]

Motion for a resolution
Recital A

A. whereas covered bonds (CBs) are instruments with a long-established track record of low default rates and reliable payments; helping to finance around 20% of European mortgages and representing more than € 2,000 bn of liabilities in Europe in 2015; whereas ca. 90% of CBs worldwide are issued in nine European countries;

Amendment 10 #

Motion for a resolution
Recital A h (new)

A h. whereas the positions of unsecured bank creditors are adversely affected by asset encumbrance due to overcollateralization (OC) requirements but not by the principle of debt finance with segregated cover pools, whereas such operations involving loan-to-value ratios well below 100% generally improve the positions of unsecured bank creditors to the extent that these reserves are not needed to satisfy claims against the cover pool;

Amendment 100 #

Motion for a resolution
Paragraph 5 – point b

b) The maximum LTV parameters for mortgages are set by European law in such a way that they do not surpass the LTV ratios currently fixed in Article 129 CRR, but are subject to regular review and adjustment in line with independent assessments (stress tests) of pricing conditions which might prevail in the relevant real estate markets under stress; the use of loan-to-mortgage lending values rather than loan-to-market values should be encouraged;

Amendment 101 #

Motion for a resolution
Paragraph 5 – point b a (new)

b a) A minimum effective overcollateralization level is set at 5% according to EBA recommendation. This amount can be calibrated based on an impact assessment and should be able to cover for relevant credit-related risks while avoiding undue asset encumbrance;

Amendment 102 #

Motion for a resolution
Paragraph 5 – point c

~~c) The maturity of the CB cannot be extended, except in the event of insolvency or resolution of the issuer and with approval by the competent supervisory authority;~~deleted

Amendment 103 #

Motion for a resolution
Paragraph 5 – point c

~~c) The maturity of the CB cannot be extended, except in the event of insolvency or resolution of the issuer and with approval by the competent supervisory authority;~~deleted

Amendment 104 #

Motion for a resolution
Paragraph 5 – point c

c) The maturity of the CB cannot be extended, except in the event of insolvency or resolution of the issuer and with approval by the competent supervisory authority. The exact conditions of the extension event and potential changes of coupon, maturity and other features should be made clear in the terms and conditions of each bond;

Amendment 105 #

Alfred SANT, Jeppe KOFOD, Costas MAVRIDES, Luigi MORGANO

Motion for a resolution
Paragraph 5 – point c

c) The maturity of the CB can~~not~~ be extended, ~~except in the event of insolvency or resolution of the issuer and with approval by the competent supervisory authority;~~subject to objective financial triggers established by national law, including in the event of insolvency or resolution of the issuer.

Amendment 106 #

Motion for a resolution
Paragraph 5 – point c a (new)

c a) The requirements for soft bullet and conditional pass-through (CPT) structures to qualify as CB;

Amendment 107 #

Motion for a resolution
Paragraph 6

6. Emphasises that the risk weights assigned to CBs in European legislation must reflect market assessments of underlying risks; underlines the need to eliminate market distortions by ensuring that the same applies to all other types of securities that enjoy preferential regulatory treatment, particularly government bonds;

Amendment 108 #

Motion for a resolution
Paragraph 6

6. Emphasises that the risk weights assigned to CBs in European legislation must reflect market assessments of underlying risks; underlines the need to ~~eliminat~~remove market distortions by ensuring that the same applies to all other types of ~~securitie~~debt instruments that enjoy preferential regulatory treatment;

Amendment 109 #

Motion for a resolution
Paragraph 6 a (new)

6 a. Calls on the Commission to empower the ESAs to evaluate compliance with the criteria for CBs and ESNs with the aim to replace the lists provided for in Article 52 (4) sub-paragraph of UCITS Directive by an authoritative list of compliant covered bond regimes at the European level.

Amendment 11 #

Motion for a resolution
Recital A i (new)

A i. whereas CBs feature prominently on the asset side of the balance sheets of many banks, whereas it is essential for financial stability that these assets remain at maximum safety and liquidity, whereas this objective should not be undermined by innovations in CBs which allow issuers to transfer risk to investors at their discretion;

Amendment 110 #

Motion for a resolution
Paragraph 6 a (new)

6 a. Calls on the Commission to clearly propose the requirements on the eligibility of covered assets and on substitution assets;

Amendment 111 #

Motion for a resolution
Paragraph 6 b (new)

6 b. Stresses that issuers should carry out regular stress tests on the calculation of the coverage requirements, taking into account the main risk factors affecting the CB, such as, credit interest rate, currency and liquidity risks;

Amendment 112 #

Renato SORU

Motion for a resolution
Paragraph 7

7. Recommends that market access barriers for issuers in developing CB and ESN markets outside the EEA be removed by providing equitable treatment to CBs and ESNs from issuers in third countries, provided their legal, institutional and supervisory environment passes a thorough equivalence assessment by a competent European institution, and by promoting the key principles of EU legislation so that they represent a potential gold standard for the CB market worldwide;

Amendment 113 #

Motion for a resolution
Paragraph 7

7. Recommends that market access barriers for issuers in developing CB ~~and ESN~~ markets outside the EEA be removed by providing equitable treatment to CBs ~~and ESNs~~ from issuers in third countries, provided their legal, institutional and supervisory environment passes a thorough equivalence assessment by a competent European institution;

Amendment 114 #

Motion for a resolution
Paragraph 8

8. Calls for a revision of EU financial services legislation with the aim of ~~granting CBs adequate regulatory preference over ESNs~~assessing and adapt it if adequate to a new pan-European CB framework;

Amendment 115 #

Motion for a resolution
Paragraph 8 a (new)

8 a. Calls on the Commission that on this assessment take into account the potential of both CBs and ESNs to the achievement of Capital Markets Union's objectives;

Amendment 116 #

Motion for a resolution
Paragraph 9

9. ~~Welcome~~Supports improvements in CB rating methodologies and the expansion of the rating markets for CBs, but warns not to add more complexity and unnecessary bureaucratic burden to well-functioning CB markets;

Amendment 117 #

Motion for a resolution
Paragraph 9 a (new)

9 a. Underlines the importance of a level playing field to ensure fair competition in financial markets; emphasizes that European legislation must not discriminate between different types of CBs unless there are good reasons to assume that these differ either in terms of safety or in terms of liquidity;

Amendment 118 #

Motion for a resolution
Paragraph 11

~~11. Supports the development of EBA recommendations for market standards and guidelines on best practices; encourages voluntary convergence along these lines;~~deleted

Amendment 119 #

Motion for a resolution
Paragraph 11

11. Supports the development of EBA recommendations for market standards and guidelines on best practices; ~~encourage~~appreciates that the third step is voluntary con~~vergence along these lines~~ly;

Amendment 12 #

Motion for a resolution
Recital A j (new)

A j. whereas CB issuances with conditional maturity extension (soft-bullet and conditional pass-through (CPT) structures) have increased by 8% p. a. to 45% in April 2016, whereas such options mitigate liquidity risk in mismatched cover pools, reduce OC requirements and help to avoid fire sales, whereas, however, maturity extensions shift issuer risk to the investors, whereas preferential regulatory treatment should only be granted to debt instruments which are particularly safe;

Amendment 120 #

Motion for a resolution
Paragraph 12

~~12. Encourages the regular execution of stress tests for CB programmes and the publication of stress test results;~~deleted

Amendment 121 #

Motion for a resolution
Paragraph 12

12. Encourages the regular execution of stress tests for CB ~~programme~~cover pools and the publication of stress test results;

Amendment 13 #

Motion for a resolution
Recital B a (new)

Ba. whereas the impacts of the financial crisis, which have undermined trust among many stakeholders, have made it necessary to introduce a greater degree of transparency and robustness in the financial system;

Amendment 14 #

Motion for a resolution
Recital B a (new)

B a. whereas CB markets are lagging behind in Member States without national tradition or where their growth is impeded by sovereign risk or difficult macroeconomic conditions;

Amendment 15 #

Motion for a resolution
Recital B a (new)

B a. whereas the high diversity of the national covered bond frameworks, in particular relating to technical aspects as the level of public supervision, is acknowledged;

Amendment 16 #

Motion for a resolution
Recital B a (new)

Ba. whereas an EU-wide framework for covered bonds must be geared to the highest standards;

Amendment 17 #

Motion for a resolution
Recital B b (new)

B b. whereas there are several very successful national frameworks for CBs, grounded on historical and legal factors and partly embedded in national law; whereas those national frameworks share fundamental characteristics, in particular the dual recourse, the segregation of cover pools with low-risk assets and special public supervision; whereas it may prove beneficial to extend these principles to other types of debt instruments;

Amendment 18 #

Motion for a resolution
Recital B b (new)

B b. whereas harmonisation should not be based on a one-size-fits-all approach as it could drive a serious reduction of product diversity and might negatively influence national markets that have been functioning well;

Amendment 19 #

Motion for a resolution
Recital B b (new)

Bb. whereas CBs retained high levels of security and liquidity during the financial crisis, which has to be attributed to the quality of national regulation;

Amendment 2 #

Motion for a resolution
Recital A a (new)

A a. whereas, however, maturity extensions shift issuer risk to the investors only in cases where the issuer has the right to extend maturities (and not only the "Sachwalter") and where the maturity extension is not bound by any legal requirements, whereas preferential regulatory treatment should only be granted to assets which are particularly safe;

Amendment 20 #

Motion for a resolution
Recital B c (new)

B c. whereas market participants have undertaken initiatives to foster the development of CB markets, such as the creation in 2013 of the Covered Bond Label (CBL) and the Harmonized Transparency Template (HTT);

Amendment 21 #

Motion for a resolution
Recital B c (new)

Bc. whereas subsidiarity is a key criterion which is firstly not incompatible, and which should secondly not be subordinate to harmonisation and economic integration policies;

Amendment 22 #

Motion for a resolution
Recital B d (new)

Bd. whereas the introduction of the European Secured Notes referred to in the Green Paper on the Capital Markets Union and proposed by various institutions, which in practical terms represent a hybrid product between covered bonds and securitisation, has not helped to stabilise the financial system since they have undermined the confidence of stakeholders and may ultimately damage the covered bond market;

Amendment 23 #

Motion for a resolution
Recital B d (new)

B d. whereas following a supervisory review the EBA has identified best practices for CBs' issuance and supervision and assessed national frameworks' alignment with those practices;

Amendment 24 #

Motion for a resolution
Recital B e (new)

B e. whereas in response to the COM's public consultation a large majority of stakeholders has indicated opposing complete harmonisation and investors have emphasized to value product diversity; whereas stakeholders have shown cautious support for EU legislation provided that it is principles based and builds on existing frameworks respecting in particular the characteristics of national frameworks;

Amendment 25 #

Motion for a resolution
Paragraph 1

1. Stresses that domestic and cross- border investments in CBs work well in EU markets under the current legislative framework; emphasises that ~~product~~ diversity of sound and safe products should be maintained;

Amendment 26 #

Alfred SANT

Motion for a resolution
Paragraph 1

1. Stresses that domestic and cross- border investments in CBs have worked well in EU markets under the current legislative framework; emphasises that product diversity should be maintained;

Amendment 27 #

Motion for a resolution
Paragraph 1 a (new)

1 a. Emphasises that the potential new European framework for covered bonds, aligning with best practises, should be a benchmark for fledgling markets.

Amendment 28 #

Motion for a resolution
Paragraph 2

2. Warns that a mandatory harmonisation of national models or their replacement by a European one cshould lead to unintended negative consequences for markets whose current success relies on CB legislation being embedded in national laws; insists that European legislation be limited to a principles-based approach which establishes the objectives but leaves the ways and means to be specified in the transposition to national lawstake into account best practices and the success of the CB market;

Amendment 29 #

Motion for a resolution
Paragraph 2

2. Warns that a mandatory harmonisation of national models or their replacement by a European one could lead to unintended negative consequences for markets whose current success relies on CB legislation being embedded in national laws; insiselcomes a European framework that enhances the quality of covered bond products currently stipulated mainly in national systems; Supports that European legislation ~~be limited to~~adopts a principles-based approach which establishes the objectives but leaves the ways and means to be specified in the transposition to national laws; Points out that a mandatory harmonisation of national models or their replacement by a European one could lead to unintended negative consequences for markets whose current success relies on CB legislation being embedded in national laws;

Amendment 3 #

Motion for a resolution
Recital A a (new)

A a. whereas CBs played a key role in the funding of credit institutions, in particular during the crisis, whereas the 2008-2014 episode of increasing spreads in CB prices across Member States is no compelling evidence of market fragmentation, since the spreads were highly correlated with spreads in government bonds and were possibly mere reflections of underlying risks in cover pools, whereas an appropriate risk sensitivity of covered bonds prices across Member States is evidence of well- functioning and well integrated markets;

Amendment 30 #

Motion for a resolution
Paragraph 2

2. Warns that a mandatory harmonisation of national models or their replacement by a European one could lead to unintended negative consequences for markets whose current success relies on CB legislation being embedded in national laws; insists that ~~European legislation~~a more integrated European framework should be limited to a principles-based approach which establishes the objectives but leaves the ways and means to be specified in the transposition to national laws; stresses that this framework should be based on high- quality standards and best market practices, building on national regimes that work well without disrupting them.

Amendment 31 #

Motion for a resolution
Paragraph 2 a (new)

2 a. The issuance of covered bonds is an ordinary mean of funding and therefore within the full control of banks sound and prudent management policy. If a bank satisfies the prudential requirements set forth under the CRR/CRDIV rules, it should be allowed to issue covered bonds without any additional capital requirement condition. In this light all the obstacles to covered bonds issuance at a national level should be removed.

Amendment 32 #

Luigi MORGANO

Motion for a resolution
Paragraph 2 a (new)

2 a. Calls on the Commission to identify possible obstacles at national level to the development of covered bonds systems and to publish guidelines to eliminate these barriers, without prejudice to banks sound and prudent conduct of business;

Amendment 33 #

Alfred SANT, Mady DELVAUX, Jeppe KOFOD, Costas MAVRIDES

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘covered bonds’ must not fall below the standards currently set by Article ~~129~~52(4) of the ~~CRR; requests that securities incompatible with this definition but compatible with Article 52(4) of the UCITS Directi~~UCITS Directive; CBs which are also compliant with Article 129 of the CRR should benefit from preferential risk weight treatment; for the achievement of the Capital Markets Union's objective, recognizes the potential of UCITS compliant dual recourse securities, with different requirements in terms of eligible cover aressets; calls on the Commission to properly defined them in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs);

Amendment 34 #

Andrea COZZOLINO, Luigi MORGANO

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘covered bonds’ must not fall below the standards currently set by Article 129 of the CRR~~; requests that s~~ or by Article 52(4) of the UCITS Directive; requests that UCITS compliant dual recour~~ities incompatible with this definition but compatible with Article 52(4) of the UCITS Directive~~se instruments, with different requirements in terms of eligible cover assets, are properly defined in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs);

Amendment 35 #

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘covered bonds’ must not fall below the standards currently set by Article ~~129~~52(4) of the ~~CRR; requests that~~UCITS Directive. Those securities incomp~~atible with this definition but compatible~~lying with Article 52(4) of the UCITS Directive arwhose cover pool consists of SME and infrastructure loans shall be properly defined in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs);

Amendment 36 #

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘covered bonds’ must not fall below the standards currently set by Article 129 of the CRR; requests that securities incompatible with this definition but compatible with Article 52(4) of the UCITS Directive are properly defined in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs)believes that European covered bonds do not add anything positive to business financing and may even introduce factors of confusion and make the markets more opaque;

Amendment 37 #

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘covered bonds’ must not fall below the standards currently set by Article 129 of the CRR; requests that securities incompatible with this definition but compatible with Article 52(4) of the UCITS Directive are properly defined in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs); recognizes the potential of UCITS compliant securities for the achievement of the Capital Markets Union's objective;

Amendment 38 #

Frank ENGEL

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘covered bonds’ must not fall below the standards currently set by Article 129 of the CRR including exposures to public undertakings in the meaning of article 8 of Council Regulation 3603/93; requests that securities incompatible with this definition but compatible with Article 52(4) of the UCITS Directive are properly defined in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs);

Amendment 39 #

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securities henceforth called ‘'covered bonds’' must ~~not fall below~~go beyond the standards currently set by Article 129 of the CRR; requests that securities incompatible with this definition but compatible with Article 52(4) of the UCITS Directive are properly defined in the same directive under a name clearly distinct from ‘'covered bonds’'; suggests that this name may be ‘'European Secured Notes’'; (ESNs);

Amendment 4 #

Motion for a resolution
Recital A b (new)

A b. whereas there is significant cross- border investment in European CB markets, whereas CBs have a well- diversified investor base where banks feature prominently with a market share of roughly 35 % between 2009 and 2015, whereas the market share of asset managers, insurance companies and pension funds has shrunk by almost 20 percentage points and was basically replaced by higher Central Bank investments in CBs;

Amendment 40 #

Motion for a resolution
Paragraph 3

3. Calls for a clear definition of CBs in a European Directive; insists that the definition for ~~securitie~~debt instruments henceforth called ‘covered bonds’ must not fall below the standards currently set by Article 129 of the CRR; requests that ~~securitie~~debt instruments incompatible with this definition but compatible with Article 52(4) of the UCITS Directive are properly defined in the same directive under a name clearly distinct from ‘covered bonds’; suggests that this name may be ‘European Secured Notes’; (ESNs);

Amendment 41 #

Motion for a resolution
Paragraph 3 a (new)

3 a. Supports the principle that the only eligible cover pool assets for CBs should be assets which cannot be moved out of the country or assets fully backed by government authorities;

Amendment 42 #

Motion for a resolution
Paragraph 3 a (new)

3 a. Calls for the exclusion of CBs and ESNs from the calculation of the contributions to the Single Resolution Fund;

Amendment 43 #

Motion for a resolution
Paragraph 3 b (new)

3 b. Supports keeping a preferential regulatory treatment for CBs over other forms of collateralised debt; notes that ESNs would be exempted from the bail-in tool in Article 44 of the BRRD; underlines that European legislation on minimum standards is warranted for all debt instruments which benefit from preferential regulatory treatment;

Amendment 44 #

Motion for a resolution
Paragraph 3 c (new)

3 c. Encourages the development, for all securities which are compatible with Article 52 (4) UCITS, of a legal framework whose principles would be laid down in the directive, calls on Member States to integrate these principles in national law and their insolvency proceedings, properly distinguishing between CBs and ESNs;

Amendment 45 #

Motion for a resolution
Paragraph 3 d (new)

3 d. Emphasizes that a sound legal framework for CBs and ESNs would have a potential to make ESNs more transparent, more liquid and more cost efficient than securities which make use of contractual arrangements, points out that this may help ESNs to finance riskier activities such as SME credits, consumer credits or infrastructure investments which lack government guarantees, points out that the development of ESNs should not be restricted as long as no systemic risks are discernible;

Amendment 46 #

Motion for a resolution
Paragraph 3 e (new)

3 e. Encourages setting minimum supervisory standards in the directive which reflect identified best practices for both CBs and ESNs; encourages supervisory convergence across the EU;

Amendment 47 #

Motion for a resolution
Paragraph 3 f (new)

3 f. Calls for the directive to increase transparency with respect to information about cover pool assets and the legal framework ensuring dual recourse and segregation of the cover pool assets in the case of issuer insolvency or resolution, insists that also in this respect the directive be principles-based focusing only on informational requirements;

Amendment 48 #

Motion for a resolution
Paragraph 3 g (new)

3 g. Calls on the ECB to gradually disengage from CB markets in the near future, calls on private investors which have been crowded out by the ECB to resume their lending activities at previous levels;

Amendment 49 #

Motion for a resolution
Paragraph 4 – introductory part

4. Calls on the Commission to propose a Directive defining CBs ~~and ESNs~~, including all the following common principles:

Amendment 5 #

Motion for a resolution
Recital A c (new)

A c. whereas under its expansionary monetary policy the Eurosystem is by far the largest single investor in CBs, owning almost one third of the total euro benchmarks issued by euro area issuers, whereas the market share of the European Central Bank is so large that the ECB enjoys considerable market power;

Amendment 50 #

Motion for a resolution
Paragraph 4 – introductory part

4. Calls on the Commission to propose a Directive defining CBs and ESNs, including all the following common principles achievable through-out the life of this issued in-strument independent of potential preferential treatment. :

Amendment 51 #

Motion for a resolution
Paragraph 4 – introductory part

4. Calls on the Commission to propose a ~~Directi~~revision of the European banking legislation which specifies the regulatory treatment of CBs and ESNs, giving clear preference to CBs over ESNs and possibly over d~~efining CBs and ESNs, including~~ifferent types of ESNs; calls on the Commission to present its proposals for CBs and ESNs simultaneously in order to avoid market disruptions during transition phases.; calls on the Commission to include in this definition all the following common principles:

Amendment 52 #

Motion for a resolution
Paragraph 4 – point b – paragraph 1 – introductory part

~~National law~~A European framework should ensures dual recourse, i.e. the investor has:

Amendment 53 #

Motion for a resolution
Paragraph 4 – point b – paragraph 1 – introductory part

National law ensures ~~dual recourse, i.e.~~that the investor has:

Amendment 54 #

Motion for a resolution
Paragraph 4 – point b – paragraph 1 – point i

i) a claim on the issuer of the ~~security~~debt instrument equal to the full payment obligations attached to it, and

Amendment 55 #

Motion for a resolution
Paragraph 4 – point b – paragraph 1 – point i

i) a claim on the issuer of the security equal to the full payment obligations attached to it, ~~and~~

Amendment 56 #

Motion for a resolution
Paragraph 4 – point b – paragraph 1 – point ii

ii) an equivalent priority claim on the cover pool assets (including substitution assets and derivatives) in the event of the issuer’s default. and

Amendment 57 #

Motion for a resolution
Paragraph 4 – point b – paragraph 2

~~Should these claims be insufficient to fully meet the issuer’s payment obligations, the investor’s residual claims must b~~iii) other claims which are at least pari passu with claims of the issuer’s unsecured creditors to ensure unpaid amounts receiving from claims under I) and ii);

Amendment 58 #

Motion for a resolution
Paragraph 4 – point b – paragraph 2

Should these claims be insufficient to fully meet the issuer’s payment obligations, the investor’s residual claims must be ~~at least~~ pari passu with claims of the issuer’s unsecured creditors;

Amendment 59 #

Motion for a resolution
Paragraph 4 – point c

c) ERequirements on the coverage principle, liquidity risk mitigation and cover pool derivatives; stresses that effective segregation of all cover pool assets ishould be ensured in legally binding arrangements which are easily enforceable in the event of insolvency or resolution of the issuer. The same will hold for all substitution assets and derivatives hedging risks of the cover pool;

Amendment 6 #

Motion for a resolution
Recital A d (new)

A d. whereas CBs are attractive debt instruments since they are - up to the level of collateral in the cover pool - exempted from the bail-in tool in Article 44 of the BRRD, whereas CBs which are compliant with Article 129 of the CRR enjoy preferential risk weight treatment;

Amendment 60 #

Motion for a resolution
Paragraph 4 – point d

d) ~~The CB is~~CBs and ESNs are bankruptcy remote, i.e. it is ensured that the issuer’'s payment obligations are not automatically accelerated in the event of the issuer’'s insolvency or resolution;

Amendment 61 #

Motion for a resolution
Paragraph 4 – point e

e) Overcollateralisation (OC) is applied to the cover pool. By an extent to be determined in national law, the net present value of all cover pool assets must always be greater than the net present value of outstanding payment obligations. The value of cover pool assets is at all times to be determined on the basis of market prices when market prices are available and on the basis of face values adjusted for market conditions if no market prices are available;

Amendment 62 #

Motion for a resolution
Paragraph 4 – point e

Amendment 63 #

Motion for a resolution
Paragraph 4 – point e

e) Overcollateralisation (OC) is applied to the cover pool. ~~By an extent to be determined in national law,~~The OC level should ensure that the value of all cover pool assets must always be greater than the net present value of outstanding payment obligations. The value of cover pool assets is at all times to be determined on the basis of market prices when market prices are available and on the basis of face values adjusted for market conditions if no market prices are available; Calls on the Commission and EBA to propose a methodology on how to determine a minimum effective OC at the CB and ESN level;

Amendment 64 #

Motion for a resolution
Paragraph 4 – point e

e) Overcollateralisation (OC) is applied to the cover pool. By an extent to be determined in national law, the value of all cover pool assets must always be greater than the net present value of outstanding payment obligations. The value of cover pool assets is at all times to be determined on the basis of ~~market prices when market prices are available and on the basis of face values adjusted for market conditions if no market prices are availabl~~nominal value;

Amendment 65 #

Motion for a resolution
Paragraph 4 – point e

e) Overcollateralisation (OC) is applied to the cover pool. By an extent to be determined in national law, the value of all cover pool assets must always be greater than the net present value of outstanding payment obligations. The value of cover pool assets is at all times to be determined onby the ~~basis of market prices when market prices are available and on the basis of face values adjusted for market conditions if no market prices are available~~laws applicable in national jurisdictions re the question of market prices or the use of mortgage lending values in combination with low LTMLV-limits;

Amendment 66 #

Motion for a resolution
Paragraph 4 – point e

e) Overcollateralisation (OC) is applied to the cover pool. By an extent to be determined in national law, the value of all cover pool assets must always be greater than the net present value of outstanding payment obligations. The ~~value of~~underlying calculation methods for cover pool assets ~~is at all~~ and liabilitimes ~~to be determined on the basis of market prices when market prices are available~~(e.g. book value, nominal value or swap rate discounted values) and on the ~~basis of face values adjusted for market conditions~~calculation frequency (at least monthly) should be clearly defined ifn n~~o market prices are available;~~ational law.

Amendment 67 #

Motion for a resolution
Paragraph 4 – point e

e) ~~Overcollateralisation (OC) is applied to the cover pool~~CBs and ESNs are overcollateralised. By an extent to be determined in national law, the value of all cover pool assets must always be greater than the ~~net~~ present value of outstanding payment obligations. The values of cover pool assets isare at all times to be determined on the basis of market prices when market prices are available and on the basis of face values adjusted for market conditions and downside risks if no market prices are available;

Amendment 68 #

Motion for a resolution
Paragraph 4 – point e

e) Overcollateralisation (OC) ~~is applied to~~reflecting the risks of the cover pool is applied. By an extent to be determined in national law, the value of all cover pool assets must always be greater than the net present value of outstanding payment obligations. The value of cover pool assets is at all times to be determined on the basis of market prices when market prices are available and on the basis of face values adjusted for market conditions if no market prices are available;

Amendment 69 #

Motion for a resolution
Paragraph 4 – point f

f) European or national law defines maximum loan-to-value (LTV) parameters for cover pool assets in a way that ensures that the removal of cover pool assets on the grounds of insufficient LTV occurs only if they are replaced by assets of at least the same market value. The removal of cover pool assets in breach of LTV limits should not be mandatory, as maximum LTV requirements should only determine the contribution of any given cover pool asset to the coverage requirement;deleted

Amendment 7 #

Motion for a resolution
Recital A e (new)

A e. whereas one factor in bank demand for CBs is the preferential regulatory treatment for CBs in the LCR Delegated Act which allows banks to include CBs in the liquidity buffer even if they are not LCR eligible under Basel Rules;

Amendment 70 #

Motion for a resolution
Paragraph 4 – point f

f) European or national law defines maximum loan-to-value (LTV) parameters for cover pool assets in a way that ensures that the removal of cover pool assets on the grounds of insufficient LTV occurs only if they are replaced by assets of at least the same market value. TCalls on the Commission to assess if the removal of cover pool assets in breach of LTV limits should not be mandatory, as maximum LTV requirements should only determine the contribution of any given cover pool asset to the coverage requirement and to propose changes if needed;

Amendment 71 #

Motion for a resolution
Paragraph 4 – point f

f) European or national law defines maximum loan-to-value (LTV) parameters for cover pool assets in a way that ensures that the removal of cover pool assets oin ~~the grounds of insufficient LTV~~breach of the LTV requirements occurs only if they are replaced by ~~assets of at~~ eligible as~~t the same market value.~~sets.1a The removal of cover pool assets in breach of LTV limits should not be mandatory, as maximum LTV requirements should only determine the contribution of any given cover pool asset to the coverage requirement; _________________ 1aVerband Deutscher Pfandbriefbanken, position paper on the draft report "Towards a Pan-European Covered Bond Framework", Topic No 3

Amendment 72 #

Motion for a resolution
Paragraph 4 – point f

f) European or national law defines maximum loan-to-value (LTV) parameters for cover pool assets in a way that ensures that the removal of cover pool assets on the grounds of ~~insufficient LTV~~a breach of the LTV limit occurs only if they are replaced by ~~assets of at~~ coverable as~~t the same market value~~sets. The removal of cover pool assets in breach of LTV limits should not be mandatory, as maximum LTV requirements should only determine the contribution of any given cover pool asset to the coverage requirement;

Amendment 73 #

Motion for a resolution
Paragraph 4 – point f

f) European or national law defines maximum loan-to-value (LTV) parameters for cover pool assets in a way that ensures that the removal of cover pool assets on the grounds of insufficient LTV occurs only if they are replaced by other assets of at least the same ~~market~~nominal value. The removal of cover pool assets in breach of LTV limits should not be mandatory, as maximum LTV requirements should only determine the contribution of any given cover pool asset to the coverage requirement;

Amendment 74 #

Motion for a resolution
Paragraph 4 – point g

g) A part of the cover pool assets or liquidity facilities is sufficiently liquid such that the payment obligations of the CB or ESN programme can be met for the next six months, except in cases with match funded bonds or bonds with a soft bullet and conditional pass through (CPT);

Amendment 75 #

Motion for a resolution
Paragraph 4 – point g a (new)

g a) Only derivative instruments exclusively for risk hedging purposes are allowed in covered bond programmes and derivative contracts entered into by the covered bond issuer with a derivative counterparty and registered in the cover pool cannot be terminated upon the issuer's insolvency;

Amendment 76 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – introductory part

~~National law provides for a robust special public supervision framework by specifying the competent authority, the cover pool monitor and the special administrator, a~~CB and ESN are subject to special public supervision with the overall objective of protecting covered bond investors and ensuring proper functioning of the covered bond programme. This supervision shall be based on sufficiently determined principles, harmonised at the EU level, covering the following areas: (i) competences of the cover pool monitor; (ii) supervision of the covered bond issuer in going concern; and (iii) supervision and duties and powers of the competent authority in the event of the issuer's insolvency/resolution. Along with a clear definition of the duties and supervisory powers of the competent national authority, it is important to ensure that:

Amendment 77 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – introductory part

~~National law provides for a~~A robust special public supervis~~ion framework by~~ory and administrative framework should be established specifying the competent authority, the cover pool monitor and the special administrator, along with a clear definition of the duties and supervisory powers of the competent authority, to ensure thate supervision of the CB issuer in going concern, with special attention to:

Amendment 78 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – introductory part

National law provides for a robust special public supervision framework by specifying the competent authority, the cover pool monitor and the special administrator, along with a clear definition of the duties and supervisory powers of the competent authority, which can also function as cover pool monitor, to ensure that:

Amendment 79 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – point ii

ii) the features of specific ~~programme~~cover pools meet the applicable requirements both prior to issuance of and until maturity of the security.

Amendment 8 #

Motion for a resolution
Recital A f (new)

A f. whereas CB programmes, under some conditions, are exempted from initial margin requirements against counterparty credit risk in derivative transactions;

Amendment 80 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – point ii

ii) the features of specific programmes meet the applicable requirements both prior to issuance of and until maturity of the ~~security.~~debt instrument;

Amendment 81 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – point ii a (new)

ii a) the covered bond's compliance with relevant requirements (including in relation to eligibility of cover assets and coverage) is subject to ongoing, regular and independent monitoring;

Amendment 82 #

Motion for a resolution
Paragraph 4 – point h – paragraph 1 – point ii a (new)

ii a) calls on EBA to provide the necessary guidelines for the establishment of such special public supervisory and administrative framework;

Amendment 83 #

Motion for a resolution
Paragraph 4 – point h – paragraph 2

~~The duties and powers of the competent authority and the special administrator in the event of the issuer’s insolvency or resolution must be clearly defined;~~deleted

Amendment 84 #

Motion for a resolution
Paragraph 4 – point h – paragraph 2

TFurthermore, the duties and powers of the competent authority and the special administrator in the event of the issuer’s insolvency or resolution must be clearly defined;

Amendment 85 #

Motion for a resolution
Paragraph 4 – point i

i) The issuer is required to disclose at least biannually aggregate data on the programme to a level of detail that enables investors to carry out a comprehensive risk analysis. Information should be provided on the credit risk, market risk and liquidity risk characteristics of cover assets, on counterparties involved in the programme ~~and~~ on the levels of legal, contractual and voluntary OC and contain a section on derivatives attached to cover pool assets and liabilities;

Amendment 86 #

Motion for a resolution
Paragraph 4 – point i

i) The issuer is required to disclose at least biannually aggregate data on the programme to a level of detail that enables investors to carry out a comprehensive risk analysis. Information should be provided on the credit risk, market risk and liquidity risk characteristics of cover assets, on counterparties involved in the programme and on the levels of legal, contractual and voluntary OC and on the issuer compliance with regulatory criteria (CRR and LCR);

Amendment 87 #

Motion for a resolution
Paragraph 4 – point i

i) The issuer is required to disclose at least ~~biannually~~on a quarterly basis aggregate data on the programme to a level of detail that enables investors to carry out a comprehensive risk analysis. Information should be provided on the credit risk, market risk and liquidity risk characteristics of cover assets, on counterparties involved in the programme and on the levels of legal, contractual and voluntary OC;

Amendment 88 #

Motion for a resolution
Paragraph 4 – point i

i) The issuer is required to disclose at least biannually aggregate data on the ~~programme~~cover pools to a level of detail that enables investors to carry out a comprehensive risk analysis. Information should be provided on the credit risk, market risk and liquidity risk characteristics of cover assets, on counterparties involved in the ~~programme~~cover pools and on the levels of legal, contractual and voluntary OC;

Amendment 89 #

Motion for a resolution
Paragraph 4 – point i a (new)

i a) National law provides authorization for further segregation of assets to be included in cover pool in order to give necessary opportunity to create separate homogeneous cover pools including homogenous asset classes (in particular such as residential and commercial)

Amendment 9 #

Motion for a resolution
Recital A g (new)

A g. whereas CBs may, at national discretion, be exempted from the EU requirements on large exposures;

Amendment 90 #

Andrea COZZOLINO, Luigi MORGANO

Motion for a resolution
Paragraph 4 – point i a (new)

i a) The maturity of the CB cannot be extended, except in the event of insolvency or resolution of the issuer and with approval by the competent supervisory authority; the maturity extension should not exceed one year;

Amendment 91 #

Motion for a resolution
Paragraph 5 – point a

~~a) The security is fully collateralised by assets defined by Article 129(1)(a)-(f) of the CRR and satisfies the additional requirements of Article 129(2) and (7) of the CRR;~~deleted

Amendment 92 #

Bendt BENDTSEN, Gunnar HÖKMARK, Jeppe KOFOD

Motion for a resolution
Paragraph 5 – point a

a) The security is fully collateralised by assets defined by Article 129(1)(a)-(f) of the CRR and in article 129(1) last two subparagraphs and satisfies the additional requirements of Article 129(2) and (7) of the CRR;

Amendment 93 #

Motion for a resolution
Paragraph 5 – point a

a) The security is fully collateralised by assets defined by Article 129(1)(a)-(fg) of the CRR and satisfies the additional requirements of Article 129(2) and (7) of the CRR;

Amendment 94 #

Motion for a resolution
Paragraph 5 – point a

(a) The security is fully collateralised by assets defined by Article 129(1)(a)-(fg) of the CRR and satisfies the additional requirements of Article 129(2) and (7) of the CRR;

Amendment 95 #

Motion for a resolution
Paragraph 5 – point a

a) The ~~security~~debt instrument is fully collateralised by assets defined by Article 129(1)(a)-(d) and (f) of the CRR and satisfies the additional requirements of Article 129(23) and (7) of the CRR;

Amendment 96 #

Motion for a resolution
Paragraph 5 – point a a (new)

a a) All cover assets as specified in the Article 129(1)(a)(b) and (c) of the CRR should be allowed as substitution assets contributing towards the coverage requirement, subject to limits on credit quality and exposure size as currently set out in the Article 129(1). Substitution assets contributing towards the coverage requirement should be limited to maximum 15% of minimum required coverage (including minimum effective over-collateralisation);

Amendment 97 #

Motion for a resolution
Paragraph 5 – point b

b) The maximum LTV parameters for mortgages are set by European law in such a way that they do not surpass the LTV ratios currently fixed in Article 129 CRR~~, but are subject to regular review and adjustment in line with independent assessments (stress tests) of pricing conditions which might prevail in the relevant real estate markets under stress~~;

Amendment 98 #

Motion for a resolution
Paragraph 5 – point b

b) The maximum LTV parameters for mortgages included in cover pool are set by European law in such a way that they do not surpass the LTV ratios currently fixed in Article 129 CRR, but are subject to regular review and adjustment in line with independent assessments (stress tests) of pricing conditions which might prevail in the relevant real estate markets under stress;

Amendment 99 #