Covered Bond Framework Q1 2021
Finnish covered bond framework (2)
Q1 2021
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Bankruptcy remoteness and preferential claim
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Isolation of registered collateral assets, registered derivatives from all other assets and liabilities of the insolvent issuer
Holders of covered bonds together with counterparties of registered derivatives and bankruptcy liquidity loans in bankruptcy would
rank pari passu and have a preferential claim to the cover pool (subject to a maximum LTV ratio of 70% for residential loans and
60% for commercial loans)
Post-bankruptcy procedures
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A bankruptcy administrator is appointed by the court (administration of estate) and a supervisor is appointed by the Finnish FSA
(protection of covered bond creditors' rights)
• The cover pool, derivatives and covered bonds to be kept separated from the bankruptcy estate as long as stipulated matching
and liquidity requirements are met
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Covered bond creditors and counterparties of registered derivatives would rank pari passu and have a preferential claim on the
proceeds of the liquidation of the cover pool
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