Featured Pathways

More pathways

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.

More pathways

Book a demo

Pricing

Ready to get started?

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

Featured Content

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

Book a demo

Pricing

Ready to get started?

Featured Pathways

More pathways

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.

More pathways

Book a demo

Pricing

Ready to get started?

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

Featured Content

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

Book a demo

Pricing

Ready to get started?

Book a demo

Pricing

Ready to get started?

Covered Bond Eligible Assets

Covered Bond Eligible Assets

Richard Kemmish

30 years: Capital markets & covered bonds

In this video, Richard Kemmish looks at eligible assets and analyses their effect on collateral covered bond agreements.

In this video, Richard Kemmish looks at eligible assets and analyses their effect on collateral covered bond agreements.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Covered Bond Eligible Assets

6 mins 35 secs

Key learning objectives:

  • Identify the rules outlined in Capital Requirements Regulations, article 129

  • Explain how rules differ nationally and why the definition is so narrow

  • Define ESNs, and describe the determinants

Overview:

Assets must go under intense processes such as Capital Requirements Regulations, article 129 before being labelled eligible as collateral for covered bonds. However, the definition varies globally due to different laws.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Summary

What is the EU’s official list of eligible assets?

Capital Requirements Regulations, article 129:

  • Paragraph A & B - Public-Sector Assets

These are any public sector receivables in the EU, any outside the union rated Double A minus or above, and any outside the union, rated Single A subject to a cap of 20% of the total pool.

  • Paragraph C – Swaps and Substitute Assets

It says that for an amount of up to 15% of the covered bonds outstanding, other receivables rated Double A minus or above are eligible.

  • Paragraph D & E – Residential Mortgages

The loan-to-value ratio limit is up to 80% of the value of the property backing the loan. Additional details include: certain qualifying securitisations backed by residential mortgages and guaranteed home loans are allowed under certain strict limits.

  • Paragraph F – Commercial Mortgages – the loan-to-value ratio limit is 60%
  • Paragraph G – Ship Mortgages – allows mortgages on ships to be eligible as collateral

How do definitions differ nationally?

Most countries use either this definition in their law or a subset of it. For example, some countries only allow residential mortgages, most countries disallow mortgages secured on ships.

In Germany, covered bonds can be backed by mortgages on aircraft. Also, under Turkish law, loans to small and medium-sized companies are eligible.

Why is the eligible asset definition so narrow?

  • They are simply very high credit quality assets
  • These assets were chosen because they are very important
  • Mortgages are secured on real assets
  • Underlying assets have a known value for a long time period

What are ESNs, and what needs to be considered prior to its launch?

European Secured Notes are securities backed by loans to small and medium-sized enterprises. Over 3 trillion euros of loans to SMEs on the books of European banks suggests it has clear potential to become a new significant asset class.

Determinants:

  • How to define SMEs
  • How to put in place sufficient credit safeguards
  • What sort of investor treatment would be justified for the asset class

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

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.

There are no available Videos from "Richard Kemmish"