Only four institutions responded to a European Commission “inception impact assessment” released the day after it announced plans to propose a EU covered bond legislative framework in Q1 2018, with Commerzbank analysts attributing the thin response to there being little to gain at this time.

A day after the Commission confirmed anticipated harmonisation plans, it on 9 June released the inception impact assessment – a standard Brussels procedure – for its “initiative on an integrated covered bond framework”, led by DG FISMA, inviting feedback by last Friday (7 July). The assessment summarises the issues being addressed, policy options, and a preliminary assessment of their potential impact.

Just four responses were received. The Austrian Federal Economic Chamber (Division Bank and Insurance), Finance Denmark and the French Banking Federation commented publicly, while another listed as having been contributed anonymously from Italy is identified as being from Intesa Sanpaolo in a linked pdf of the original document.

Commerzbank analysts suggested the limited feedback could be due to the vagueness of the Commission’s impact analysis.

“Moreover, it was basically limited to things that are already known,” they said. “Perhaps, after the previously published analyses from the EBA, ICF and the Parliament, not everyone saw it as a chance to convey his final impressions. After all, the key themes should have been adequately discussed by now (during its first consultation 18 months ago, more than 70 responses were received).

“Also, after two years of debate, it would be understandable if the parties felt a certain fatigue at having to continue discussing harmonisation at an abstract level.”

Respondents focused on areas where harmonisation is seen as a threat to existing national models and/or details could be left to national regulators: ships and specialist institutions, for example, for the Danes; mixed pools for the French; soft bullets and conditional pass-throughs for the Italians. The Austrian Federal Economic Chamber meanwhile highlighted the potential for banks to at times be forced to hold liquidity twice in respect of covered bonds, for LCRs and covered bond-specific liquidity buffers.