The Central Bank of Savings Banks Finland is planning a debut senior unsecured bond that will mark the reopening of wholesale funding for Finland’s Savings Banks, with covered bond issuance via a new mortgage bank set to follow next year, according to an official at the institution.

Today (Thursday) it announced a mandate for a roadshow beginning next Wednesday ahead of a planned inaugural senior unsecured issue via Crédit Agricole, LBBW and Nordea, which will be the first off an MTN programme signed yesterday (Wednesday). Standard & Poor’s on Tuesday assigned the institution an A- rating, on negative outlook.

The Central Bank of Savings Banks Finland (Sp Central Bank) is the central credit institution of the Finnish Savings Banks Group and the operational arm of Union Coop, which is responsible for the capital and funding of the group. According to S&P, since December 2014 the group’s 25 member savings banks (Säästöpankki), Union Coop and Sp Central Bank have operated as a single entity for regulatory purposes under a joint and several guarantee scheme established by a Finnish Act of Amalgamation.

The Finnish Savings Banks previously raised wholesale funding via Aktia Real Estate Mortgage Bank covered bond issuance. However, in 2012 Aktia for a variety of reasons related to regulations and ratings decided to switch to direct issuance and the joint issuance arrangement ceased.

“The number one thing is of course to open up again wholesale funding channels for the group, which have not been there since Aktia Mortgage Bank was closed down,” Kai Brander, head of treasury at Sp Central Bank, told The Covered Bond Report.

“Furthermore, we have a need to widen our funding base, which is currently very concentrated in retail deposits.”

The group is working on setting up a mortgage bank that Brander says could issue its first covered bond in very late 2015, but is most likely to enter the market in early 2016.

“On the senior unsecured side, we have plans to issue one benchmark this year,” he said. “On top of that, on the covered side – and assuming we don’t issue anything this year – it will be roughly Eu1bn in 2016 and 2017.

“With this combination we believe that we can issue two to three times annually in either senior unsecured or covered to keep our name sufficiently known in the market.”

The Savings Banks Group has assets totalling some Eu8.4bn and in residential mortgages – its main business – a market share in Finland of around 4.8%.