Dexia Bank Belgium, which is rebranding itself as Belfius Bank & Insurance, has “the perfect balance sheet” to become a covered bond issuer, the bank’s chief financial officer said yesterday (Thursday) as legislation progresses through the political process.

Johan Vankelecom, CFO, said the lender is waiting for Belgium to pass legislation enabling the issuance of covered bonds.

“With parliamentary approval possible before the summer holiday, we could start selling covered bonds as early as the third quarter,” said Vankelecom. “With a sizeable portfolio of residential mortgages and public finance loans, Dexia Bank has the perfect balance sheet to become an issuer of covered bonds.”

Belgian covered bond legislation has been in the formal political law making process for over a month, after a final draft was sent to the ministry of finance in January. A market participant familiar with the legislative initiative told The Covered Bond Report that the “normal procedure” was underway with a view of moving ahead with the parliamentary process.

In addition to Belfius, BNP Paribas Fortis and KBC are said to be frontrunners for covered bond issuance, with other financial institutions, including from outside Belgium, also said to be interested. KBC in a debt roadshow presentation dated February noted that “a regulation for the issuance of covered bonds is expected to be approved soon in Belgium”.