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Directive on track as Coreper approves final compromise text

The covered bond package looks set to be approved in the final plenary of the current European Parliament in mid-April after the final compromise text was yesterday (Wednesday) endorsed by the Council, with industry representatives welcoming the latest iterations of the Directive and Regulation.

After provisional agreement on the Directive and Regulation was reached on 27 February, Council working parties and Parliament’s ECON committee translated the political agreement into a final compromise text. This was yesterday approved by Member States in the Council through the Permanent Representatives Committee (Coreper).

ECON is now set to vote on the text on 1 April, before going to the plenary session of Parliament in the week of 15 April.

“We are very pleased to see that the legislative process is moving forward and that the schedule is clearly aiming to conclude the package in this mandate of the European Parliament, which is very good news for the industry,” Luca Bertalot, EMF-ECBC secretary general, told The CBR. “We are happy with the result of the text, which strikes the right balance among the different legislations, and the right balance between a principles-based approach and a qualitative standard.”

Wolfgang Kälberer, head of the Association of German Pfandbrief Banks’ Brussels office, said the vdp welcomes the final compromise text, saying it in many ways reflects the thinking of the German Pfandbrief Act.

“The Commission’s resolve to provide a principles-based Directive can be clearly seen,” he said. “We especially agree with the introduction of public supervision throughout the Directive.

“Overall, the outcome is suitable to secure the regulatory regime of covered bonds in European law.”

Article 6, which deals with eligible assets, was one of the most difficult parts of the Directive to find agreement on, and Kälberer noted that beyond CRR-eligible assets, “not surprisingly”, there will be three additional types of eligible assets in the Directive: high quality physical assets, exposures and public undertakings.

“Though the Pfandbrief Banks have advocated a more conservative approach towards eligible assets, we find that the introduction of the two labels – European Covered Bond (Premium) and European Covered Bonds – will help to clearly differentiate and disclose different quality standards between directive and CRR-compliant covered bonds.”

The final compromise texts can be found here.

Photo: Europa Building, Brussels; Copyright: Philippe Samyn & Partners, Studio Valle Progettazioni, Buro Happold