ING Direct in Australia will consider covered bond issuance, a spokesperson for the bank told The Covered Bond Report in the wake of its annual results this week, but he said that prevailing costs are too high, even if they are only one factor in the bank’s decision-making. Meanwhile, progress has been made in ensuring Australian covered bonds are not affected by State stamp duties.

ING Direct, Sydney

ING Direct announced its 2011 results on Wednesday, with its home loan portfolio growing to A$37.4bn (Eu29.9bn/US$39.7bn). Its retail deposits grew 12% to A$26.1bn, pushing its total deposits to loans ratio up from 57% to 64%.

Officials at the bank had discussed the potential for covered bond issuance before legislation was finalised in October. However, a spokesperson for the bank said that the price of issuing covered bonds means that it will not issue for now. He nevertheless noted that the cost of funding is “constantly moving” and that price is only one factor in the bank’s decision whether or not to issue, with others including collateral considerations.

The Australian Securitisation Forum recently informed its members that it has secured a ruling from the South Australian government that will ensure exemption from the State tax for Australian covered bond structures. RevenueSA published the ruling on 31 January.

“The announcement is sure to be welcomed by the securitisation industry, providing certainty to the parties to a securitisation transaction that involves any assignments of receivables located in South Australia,” said Clayton Utz, whose partner John Loxton was closely involved in the ASF’s work.

The industry body is still working on securing a similar move in Queensland, where the Office of State Revenue is understood to have recommended the government follow suit. The lack of clarity had previously prompted Queensland collateral to be left out of at least one Australian issuer’s cover pool.