The European Covered Bond Council is today (Friday) sending out a survey on transparency standards proposed by the Covered Bond Investor Council, with the labelling issue at the top of the ECBC’s agenda following a meeting on the issue with the European Central Bank last Friday (29 April).

The CBIC in April proposed lists of data that it believes issuers should provide to investors to improve transparency in the covered bond market and the technical issues working group of the ECBC will be discussing these at a meeting on 27 May.

Ralf Grossmann, head of covered bond origination at Société Générale and chairman of the working group, told The Covered Bond Report that the ECBC had already been co-operating with the CBIC on the transparency standards and had made progress on the topic.

“We have already done some work on our own part, with the comparative database website and looking into what different issuers provide in terms of information,” he said. “We welcome that investors have now put their ideas on the table, which will enrich our ongoing dialogue.

“If you speak to different investors you get different answers as to what they require, but now the CBIC’s transparency standards provide us with something of a consensus on what is the ultimate wish-list to work with. Now we will be meeting in the technical issues working group to see how we can address this.”

Grossmann said that the survey and working group would be looking at what data is already included in standard financial reporting by issuers and what is not.

“There are also some items that will probably be sensitive to the stock market, perhaps,” he added. “For example, if we would all disclose our margins in the mortgage business, that would probably bring the equity analysts in. And also some of the information probably needs to be approved by auditors or by internal compliance.

“These are all things we need to take account of. The national delegations and associations will play a pivotal role in determining what can be produced in what time-frame and by the different countries. We are now doing our homework.”

The CBIC transparency standards were discussed at last Friday’s meeting on labelling, and market participants have suggested that such disclosure requirements could form part of any label that is arrived at.

The ongoing labelling initiative is aimed at creating a set of standards that covered bonds have to meet in order to qualify for a label, which could then be relied upon by investors and regulators when making decisions.

Antonio Torío, chairman of the European Covered Bond Council, highlighted the strong commitment of the entire covered bond community to maintaining and further developing the existing high standards of the asset class in a changing environment ‑ something Michel Stubbe, head of the market operations analysis division at the ECB, said he hoped to see when discussing the issue at the ECB plenary in Stockholm in March.

“The covered bond labelling initiative is at the top of the ECBC agenda,” Torío told The Covered Bond Report, “and together with the transparency initiatives represents key milestones in the roadmap for the regulatory recognition of the value of the asset class. The ECB has been closely following the progress of these initiatives.

“The covered bond labelling initiative, led by the ECBC, is further reinforcing the cooperation among covered bond stakeholders in order to consolidate the nature of this asset class based on three pillars: quality, transparency and liquidity.”