Activities of Bernd LUCKE related to 2017/2005(INI)
Plenary speeches (1)
Towards a pan-European covered bonds framework (short presentation)
Reports (1)
REPORT Towards a pan-European covered bonds framework PDF (422 KB) DOC (70 KB)
Amendments (36)
Amendment 1 #
Motion for a resolution
Recital A
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 3 #
Motion for a resolution
Recital A a (new)
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 4 #
Motion for a resolution
Recital A b (new)
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 5 #
Motion for a resolution
Recital A c (new)
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 6 #
Motion for a resolution
Recital A d (new)
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 7 #
Motion for a resolution
Recital A e (new)
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 8 #
Motion for a resolution
Recital A f (new)
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 9 #
Motion for a resolution
Recital A g (new)
Recital A g (new)
A g. whereas CBs may, at national discretion, be exempted from the EU requirements on large exposures;
Amendment 10 #
Motion for a resolution
Recital A h (new)
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 11 #
Motion for a resolution
Recital A i (new)
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 12 #
Motion for a resolution
Recital A j (new)
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 14 #
Motion for a resolution
Recital B a (new)
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 17 #
Motion for a resolution
Recital B b (new)
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 20 #
Motion for a resolution
Recital B c (new)
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 23 #
Motion for a resolution
Recital B d (new)
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)
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 40 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Calls for a clear definition of CBs in a European Directive; insists that the definition for securitiedebt instruments henceforth called ‘covered bonds’ must not fall below the standards currently set by Article 129 of the CRR; requests that securitiedebt 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)
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 43 #
Motion for a resolution
Paragraph 3 b (new)
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)
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)
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)
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)
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)
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 51 #
Motion for a resolution
Paragraph 4 – introductory part
Paragraph 4 – introductory part
4. Calls on the Commission to propose a Directirevision of the European banking legislation which specifies the regulatory treatment of CBs and ESNs, giving clear preference to CBs over ESNs and possibly over defining CBs and ESNs, includingifferent 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 54 #
Motion for a resolution
Paragraph 4 – point b – paragraph 1 – point i
Paragraph 4 – point b – paragraph 1 – point i
i) a claim on the issuer of the securitydebt instrument equal to the full payment obligations attached to it, and
Amendment 60 #
Motion for a resolution
Paragraph 4 – point d
Paragraph 4 – point d
d) The CB isCBs 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 67 #
Motion for a resolution
Paragraph 4 – point e
Paragraph 4 – point e
e) Overcollateralisation (OC) is applied to the cover poolCBs 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 80 #
Motion for a resolution
Paragraph 4 – point h – paragraph 1 – point ii
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)
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 90 #
Motion for a resolution
Paragraph 4 – point i a (new)
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 95 #
Motion for a resolution
Paragraph 5 – point a
Paragraph 5 – point a
a) The securitydebt 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 100 #
Motion for a resolution
Paragraph 5 – point b
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 102 #
Motion for a resolution
Paragraph 5 – point c
Paragraph 5 – point c
Amendment 108 #
Motion for a resolution
Paragraph 6
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 eliminatremove market distortions by ensuring that the same applies to all other types of securitiedebt instruments that enjoy preferential regulatory treatment;
Amendment 117 #
Motion for a resolution
Paragraph 9 a (new)
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;