The Covered Bond Investor Council will early this month publish national templates for information it believes issuers should disclose to improve transparency, it said at a plenary session of the European Covered Bond Council yesterday (Thursday), where the ECBC also revealed an updated comparative database.

Andreas Denger, senior portfolio manager, MEAG, and vice chairman of the CBIC, said that the data lists will include:

• General issuer data
• Data on the cover pool
• Qualitative information (with issuers asked to provide certain definitions and calculations regarding the reported data requested, to make it more comparable and comprehensive)

Denger said that the Council expects the information to be made available on a regular basis – half yearly, for example – adding that the information the CBIC is asking for is mainly already available internally to issuers. Data should be available in electronic format on one page, he said.

He said that the CBIC acknowledges that there are limits on transparency and it will also not require loan-by-loan data.

Following the release of the planned data lists, the CBIC will hold a seven week public consultation, after which it will publish a feedback statement. The Council is aiming to produce the final standards for September.

Nathalie Aubry-Stacey, secretary of the CBIC and director of regulatory policy and market practice at the International Capital Market Association, set out the CBIC’s position in a contribution to The Covered Bond Report magazine, published yesterday:

Investors have been asked many times by issuers, in different contexts, what their information needs are. So far there has been no unified answer to this question, but following the growth of the covered bond market there has been an increased fragmentation in the type of information provided by issuers.

The CBIC has set up a transparency working group that has tried to identify the key information that investors in covered bonds need in order to make a fully informed investment decision as to covered bond issues, including their respective cover pools and the issuer itself. It is expected that the information required would be available on a regular basis (for example, a half yearly update) to meet investors’ transparency and information needs.

The CBIC believes it is of vital importance to improve transparency in order to increase the investor base. The objective is to make it possible for investors and analysts to compare and form an independent qualified assessment of all covered bond programmes.

The internationalisation of formerly domestic covered bond markets began 10 years ago and many European countries introduced new covered bond legislation or updated existing rules to be a part of this development, and to also respond to the considerable growth of mortgage lending activities in the European Union. Each different country’s covered bond laws regulate what assets are eligible to back covered bonds, minimum quality requirements for assets, and how investors will be protected if the issuing bank goes bankrupt. The legislation therefore stipulates how the collateral framework must operate.

It is also clear that the quality of the information available to investors remains uneven. Key information such as loan to value (LTV) and non-performing loans (NPLs), for instance, need to be fully explained when presented to investors, allowing them to assess how the calculations are being made.

The CBIC is also addressing the issue of creating a level-playing field in terms of access to this information, looking at a common platform that would provide information to investors.

The European Covered Bond Council also demonstrated an updated Covered Bond Comparative Database, building on the first version of autumn 2009. The ECBC said that the new version followed a consultation with members and feedback from users, and a complete review of the information in the database as well as its presentation.

“The ECBC database offers a unique way to easily access and compare technical details between different covered bond frameworks,” said Luca Bertalot, head of ECBC and deputy secretary general, European Mortgage Federation. “The database can also be seen as contributing towards transparency as well as helping to picture what constitutes a covered bond.”

The data base can be found here: www.ecbc.eu.