Slovakian Covered Bonds Framework II

Location:

Slovak Republic

Project number:

50646

Business sector:

Financial institutions

Notice type:

Private

Environmental category:

FI

Target board date:

13 Mar 2019

Status:

Board Approved

PSD disclosed:

19 Dec 2018

Sub-projects signed under this framework

Translated version of this PSD: Slovak

Project Description

The Covered Bonds Framework II is for up to EUR 385 million investment ("Sub-projects") in a series of newly issued mortgage covered bonds by commercial banks operating in the Slovak Republic ("Issuer" or "Issuers"), over the next three years. Eligible covered bonds will have a 5 to 10 year (bullet) maturity.

The proposed project builds on the success of the first Slovak Covered Bond Framework, approved by the EBRD Board of Directors on the 14 December 2016 for an amount of up to EUR 200 million, bringing the total available funding under Slovak Covered Bond Frameworks to up to EUR 550 million.

Project Objectives

The Sub-projects will support Issuers to access medium-term funding by using a covered bond instrument collateralised by a pool of residential mortgage loans. The proceeds from the Sub-projects will be used to (i) restructure their balance sheet (address asset-liability maturity mismatches for existing and new assets), (ii) diversify funding sources and (iii) finance mortgage loans.

Transition Impact

The proposed Covered Bonds Framework will support the Resilient and Well-governed transition qualities. The Framework seeks to strengthen the resilience of the Slovak financial sector by (i) developing the local capital market for covered bonds instrument; (ii) diversifying medium term funding sources of the financial institutions; and (iii) addressing the maturity mismatches in the financial institutions' balance sheets by extending the tenor of liabilities.

The Framework also contributes to the Well-governed quality. Covered Bonds are a well-developed asset class in the EU favored by regulators and investors due to their dual-recourse feature. This is evidenced by the high liquidity, tight pricing, and preferential regulatory treatment of this instrument, including repo-eligibility and lower risk weightings.

Client Information

The Covered Bonds will be available for commercial bank institutions in the Slovak Republic.

EBRD Finance Summary

EUR 385,000,000.00

Total Project Cost

EUR 2,000,000,000.00
With maximum EBRD investment of 20% of each covered bond issuance, the estimated total cost of projects under the Covered Bonds Framework is above EUR 1.5 billion.

Environmental and Social Summary

Categorised FI (2014 ESP). All banks participating under the Covered Bonds Framework will be required to comply with EBRD PRs 2, 4 and 9; adopt and implement the EBRD's E&S Risk Management Procedures as appropriate; and submit Annual Environmental and Social Reports to the Bank.

Technical Cooperation

None.

Company Contact Information

Valdas Vitkauskas
Vitkausv@ebrd.com
00442073388276
00442073386119
www.ebrd.com
One Exchange Square EC2A 2JN London United Kingdom

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