Decision on Documentation Regarding Conditions for Obtaining Permission to Issue Mortgage or Municipal Bonds

Evidentiary Data Collection: Other General and Individual Acts Decision on Documentation Regarding Conditions for Obtaining Permission to Issue Mortgage or Municipal Bonds Official Gazette of the Republic of Slovenia, No. 11/22 ID: SKLE12693 SOP: 2022-01-0167 Adopted: 24. 1. 2022 Published: 27. 1. 2022 Effective from: 7. 7. 2022 Type of Act: Decision Lead Agency: Bank of Slovenia Adopting Body: Bank of Slovenia Forms The electronic edition of the Official Gazette is the official edition from January 1, 2006. Before this date, official editions were published in paper form. Text Pursuant to the second paragraph of Article 7 of the Mortgage and Municipal Bond Act (Official Gazette of the RS, No. 123/21) and the first paragraph of Article 31 of the Bank of Slovenia Act (Official Gazette of the RS, No. 72/06 – consolidated text, 59/11 and 55/17), the Council of the Bank of Slovenia, having obtained the opinion of the Securities Market Agency dated December 8, 2021, issues

DECISION

on documentation regarding conditions for obtaining permission to issue a program of mortgage or municipal bonds

1. GENERAL PROVISIONS

Article 1

(content of the decision)

This Decision specifies in detail the criteria for meeting the conditions and the documentation for proving compliance with the conditions set out in the first paragraph of Article 7 of the Mortgage and Municipal Bond Act (Official Gazette of the RS, No. 123/21; hereinafter ZHKO-2), which the issuer must submit with the application for obtaining permission for a program of mortgage or municipal bonds (hereinafter application for obtaining permission).

Article 2

(use of terms)

The terms used in this Decision have the same meaning as in the provisions of ZHKO-2.

2. DOCUMENTATION FOR PROVING COMPLIANCE WITH CONDITIONS

Article 3

(business plan for issuing mortgage or municipal bonds)

With the application for obtaining permission, the issuer must attach a business plan governing the issuance of mortgage or municipal bonds, from which at least the following information must be evident:

• all types of transactions related to eligible collateral assets and issued mortgage or municipal bonds within the framework of this program, including any use of joint financing under Article 26 of ZHKO-2;
• the planned volume of individual issuances or multiple issuances within this program;
• the planned frequency of issuing mortgage or municipal bonds within this program;
• factors for any extension of the planned maturity of mortgage or municipal bonds.

Article 4

(documentation regarding policies, procedures, and methodologies for lending)

With the application for obtaining permission, the issuer must attach documentation showing that it has:

• established appropriate policies, procedures, and methodologies for the approval, modification, renewal, and refinancing of mortgage loans or loans with the obligation of a public law entity included in the collateral assets for the issuance of mortgage or municipal bonds within a specific program;
• established appropriate procedures for replacing unsuitable mortgage loans or loans with the obligation of a public law entity in accordance with Article 22 of ZHKO-2;
• lending policies compliant with the provisions of Articles 16 to 18 of ZHKO-2 in the case of mortgage bonds or with the provisions of Article 19 of ZHKO-2 in the case of municipal bonds.

Article 5

(documentation regarding the availability of appropriate personnel)

(1) With the application for obtaining permission, the issuer must attach documentation showing compliance with conditions regarding the availability of appropriate personnel, which includes the following documentation:

1. an organizational chart showing the organizational placement of departments key to carrying out transactions related to the issuance of mortgage or municipal bonds and the management of the mortgage or municipal bond program;
2. documentation showing the number of employees at managerial and operational levels who will carry out transactions related to the issuance of mortgage or municipal bonds and the management of the mortgage or municipal bond program, their educational structure, and qualifications and knowledge related to the issuance of mortgage or municipal bonds and the management of the program of these bonds;
3. regulations, instructions, or other internal acts of the issuer defining the execution of work procedures related to the issuance of mortgage or municipal bonds and the management of the mortgage or municipal bond program, including the decision-making system and responsibilities of individuals making decisions within these procedures;
4. documentation showing the replacement of key employees who will perform tasks related to the issuance of mortgage or municipal bonds and the management of the mortgage or municipal bond program.

(2) In the case of the grant of a power of attorney (prokura), the issuer must also attach data on the attorneys-in-fact and evidence of qualifications and knowledge necessary for performing the function of representing the issuer in transactions related to the issuance of mortgage or municipal bonds.

Article 6

(documentation regarding rules for maintaining the collateral register and documentation regarding the appointed collateral asset trustee)

(1) With the application for obtaining permission, the issuer must attach rules for maintaining the collateral register and supporting analytical records, which determine:

• the content and format of the collateral register;
• authorizations for access to the collateral register and supporting analytical records at the issuer;
• protection against unauthorized access to the collateral register, as well as against possible damage or destruction of the collateral register due to external influences;
• the method of ensuring the permanence of entries and the traceability of changes to entries in the collateral register;
• the equipment of entries (date and time, signature of the authorized person from the second sub-paragraph of this paragraph and the collateral asset trustee from the second paragraph of this article);
• the method of informing the management in case of disruptions in the operation of the collateral register.

(2) With the application for obtaining permission, the issuer must attach a decision on the appointment of the collateral asset trustee and their deputy, or a decision on the appointment of the collateral asset trustee and their deputy under a suspensive condition of obtaining permission from the Bank of Slovenia, if the procedure for issuing permission to the collateral asset trustee and their deputy is still ongoing.

Article 7

(statement of the collateral asset trustee regarding the coverage of the intended issuance within the mortgage or municipal bond program with appropriate collateral assets)

With the application for obtaining permission, the issuer must attach a written statement from the collateral asset trustee referred to in the fourth paragraph of Article 34 of ZHKO-2, confirming that the intended issuance within the program of mortgage or municipal bonds is covered by appropriate collateral assets in accordance with the provisions of ZHKO-2.

Article 8

(documentation on ensuring separate business operations)

(1) With the application for obtaining permission, the issuer must attach documentation showing that separate business operations have been ensured, specifically by allowing access at all times to the part of the business relating to the issuance of mortgage or municipal bonds and the management of collateral assets. This includes at least the establishment of analytical records and databases, based on which it is possible to review transactions related to mortgage or municipal bonds and related to collateral assets, separately for each program of mortgage or municipal bonds and, in the case of multiple issuances within a single program, for each individual issuance within each individual program.

(2) The attached documentation must show that the accounting books, records, and other documentation related to the granting of mortgage loans or loans with the obligation of a public law entity, the conclusion of contracts for derivative financial instruments (including all received collateral related to positions), assets intended to meet the liquidity reserve requirement, and other collateral assets are separate from each other and from the accounting books, documentation, and records of the issuer related to the issuer's remaining business.

Article 9

(documentation on rules regarding the methodology and procedure for valuing real estate)

An issuer intending to issue a program of mortgage bonds must attach to the application for obtaining permission:

• rules adopted regarding the methodology and procedure for valuing real estate, in which the methodology for assessing the mortgage credit value or market value of real estate is defined in detail in accordance with the requirements of Article 18 of ZHKO-2;
• evidence of the conclusion of an employment contract for an indefinite and full working time for at least one appraiser or evidence of the conclusion of a contract for work with an appraiser referred to in the fourth paragraph of Article 18 of ZHKO-2.

3. FINAL PROVISIONS

Article 10

(entering into force)

This Decision enters into force on July 8, 2022.

Ljubljana, January 25, 2022

Boštjan Vasle

Chairman of the Council of the Bank of Slovenia