Strong political support for depositors means set-off risk for insured domestic deposits in covered bonds is very remote in most EU countries, and in Belgium provisions in a Mobilisation Law further mitigate this risk, said Fitch yesterday (Thursday).

The rating agency previously said that strong political commitment to depositors, in the form of deposit guarantee schemes and the move toward bank resolution regimes protecting insured depositors, means that set-off risk is highly remote in most EU countries.

“As long as obligors are confident that they will not ultimately face nominal losses of deposits, we would not expect set-off to be invoked,” it said in a comment on 13 June.

In Belgium, Fitch noted yesterday, provisions in a Mobilisation Law provide mitigants against set-off losses in relation to uninsured depositors in Belgian covered bonds – Pandbrieven – and securitisations.

“[T]he ratings assigned to transactions backed by bank claims falling under the Mobilisation Law will reflect that potential set-off exposure is fully mitigated,” said Fitch, “both for insured depositors for deposits in excess of Eu100,000 and for other uninsured depositors, such as large corporates, whatever the amount of their deposit.”

The Mobilisation Law was introduced in August 2012.