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This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

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More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

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History of Covered Bonds

History of Covered Bonds

Richard Kemmish

30 years: Capital markets & covered bonds

The covered bond market has a long and illustrious history. In this first video of the series on the covered bond market, Richard describes how the covered bond has performed and how it has developed from its inception to 2008.

The covered bond market has a long and illustrious history. In this first video of the series on the covered bond market, Richard describes how the covered bond has performed and how it has developed from its inception to 2008.

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History of Covered Bonds

7 mins 18 secs

Overview

The first covered bonds were issued over 250 years ago and are seen today as a safe and risk averse asset – their investments are typically used to fund mortgages and other public sector assets. CBs grew in popularity during the 90’s/00’s via HBOS and survived the 2008 Financial Crisis.

Key learning objectives:

  • Outline the history of covered bond markets

  • Identify the properties of the modern covered bond market

  • Describe how the jumbo covered bond birthed liquidity

  • Explain how the market grew as a result of HBOS and whether it stood the test of the financial crisis

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Summary

What is the origin of the covered bond?

Covered Bonds were first issued during the reign of Friedrich the Great to help rebuild Prussia after the impact of the Seven Years’ War. It was successful and thus other European countries similarly followed. During its 250-year history, a covered bond has never defaulted.

What are some properties of the modern covered bond market?

  • Very safe
  • Conservative investor base
  • German-dominated investor base

How did formal market-making agreements help the liquidity of covered bonds?

In 1995, the first jumbo covered bond was launched where the underwriting banks formally agreed to make a market for the life of the bond with a fixed maximum bid/ask spread. It was a huge success and very rapidly this liquidity attracted foreign investors. The market-making agreements helped underpin the acceptance of covered bonds as bank liquidity assets.

How did the HBOS covered bond influence growth?

In 2003, HBOS issued the first-ever covered bond without a covered bond law. This was a huge stimulus because:

  • It put pressure on a lot of countries to introduce covered bond laws
  • Where politicians weren’t persuaded, issuers went ahead regardless using contract law
  • Many of the features introduced by HBOS made it into the more traditional covered bond markets

What were the implications of the Financial Crisis on covered bond markets?

Covered bonds survived, flourished even in the darkest days of the crisis.

Implications
  • Justified more favourable treatment of the product, in particular under EU law
  • The performance of covered bonds was noticed outside Europe

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Richard Kemmish

Richard Kemmish

Richard is a consultant working mainly in the covered bond market. He helps Finance Ministries and Central Banks in countries without covered bond laws to put legal frameworks in place. He has also helped the European Commission with their legislative agenda for covered bonds and related products.

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