| Two Irish members sign up to European Covered Bond Council |
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| Two Irish institutions have signed up to membership of the European Covered Bond Council (ECBC), which has just been set up by the European Mortgage Federation (EMF) in response to the significant growth of the market and product innovations over the past five years. The Council will represent and promote the interests of covered bond issuers and other market participants at international level. |
Bank of Ireland Mortgage Bank and the Irish Bankers Federation (IBF) are among 40 organisations that have already joined the Council. There are 15 membership applications waiting to be processed, with further expected to seek membership with the Council holds its first meeting on February 3rd. Louis Hagen, executive director of the Verband Deutscher Hpothekenbanken, has been appointed chairman of the council.
Covered bonds have emerged as the most important segment of privately issued bonds on Europe’s capital markets, with the volume outstanding at the end of 2003 amounting to over €1.5 trillion. Today there are active covered bond markets in almost 20 different European jurisdictions and there is a strong expectation that the covered bond market will continue to grow. Issuers based in Sweden, Norway and Italy are expected to transact their first covered bonds in the near future.
In Ireland, the covered bond market now exceeds €20 billion, and Barclays Capital predicts that it will grow to €50 billion. Although the market was established by public sector lenders such as Depfa ACS Bank, and WestLB Covered Bond Bank, who have undertaken multiple covered bond issues, domestic mortgage banks such as Bank of Ireland are now also entering the market. Bank of Ireland issued its first €2 billion covered bond in September 2004. In this economic and political context, the EMF said that the creation of the ECBC was a natural step. The vast majority of European covered bond issuers are already members of the Federation, either directly or through their trade association, and these represent in excess of 70 per cent market capitalisation of covered bonds.
With the continued growth of the covered bond market, the EMF subsequently identified the need to create the ECBC with the specific aim of better meeting the requirements of covered bond market participants and to create a platform for exchange of information and discussion. The ECBC will participate in developments shaping the economic and regulatory environment of covered bonds at EU level.
The council will aim to enhance the visibility of covered bonds as a specific asset class; to act as a network and a platform for the exchange of information between its members, as well as with external market players; and to study measures that could be adopted at European level and advocate its members’ positions and market-related initiatives.
It also sees a role for itself in advising EU institutions on all questions of interest to covered bond market participants; publishing position papers, reports, comparative studies and statistics on covered bond markets; and organising marketing events. |
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| Article appeared in the January 2005 issue.
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