Regulatory Alerts2018-09-20
Added · Updated
Healthy balance sheet conditions for covered bonds
Banks issuing registered covered bonds must annually submit specific indicators to DNB to demonstrate that their balance sheet ratios remain healthy. These indicators must address funding risk due to subordination, contingency funding risk, and margin call risk, including defined total unencumbered asset and backbook ratios. Based on these metrics and stress test outcomes, banks must propose issuance caps and minimum backbook levels, which DNB then sets to ensure ongoing compliance with prudential supervision requirements.