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Capital Markets Law Journal Advance Access originally published online on June 11, 2009
Capital Markets Law Journal 2009 4(3):341-382; doi:10.1093/cmlj/kmp015
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© The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

Regulated covered bonds: a comparative review

Gregory Benteux and Christine Van Gallebaert
Gide Loyrette Nouel, Paris

Dirk Bliesener and Hannes Schneider
Hengeler Mueller Partnerschaft von Rechtsanwälten, Frankfurt am Main

Henri Wagner and Paul Péporté
Allen & Overy, Luxembourg

Arjan H. Scheltema
NautaDutilh NV, Amsterdam

Colin Mercer and Richard Black
Gide Loyrette Nouel, London

The first 150 words of the full text of this article appear below.


Key points

  • A covered bond is a class of bond, generally issued by banks and backed by certain assets, generally mortgages or public sector loans.
  • The use of covered bond techniques has a long history in statutory regimes in Germany and France. More recently, covered bonds have also been constructed by contract. The UK and the Netherlands, for example, have had active ‘structured covered bond’ markets since 2003 and 2005, respectively.
  • When they are issued in compliance with Article 22(4) of Council Directive 85/611/EEC (the UCITS Directive) as regulated covered bonds, they become more attractive to certain kinds of investors.
  • In recent years, France and Germany have overhauled their regulated covered bond scheme, while Luxembourg introduced such a regime in 1997 and the Netherlands and the UK followed in 2008. This article looks at the legal position in each jurisdiction.

 


   1. Introduction
 
What are covered bonds?
A covered bond is a class of bond, generally issued . . . [Full Text of this Article]

Regulated vs structured covered bonds

   France
 

   1. Introduction
 

   2. Regulated covered bonds (obligations foncières)
 
Background and legal framework
Location of issuer
Business of issuer
Structure of covered bond programmes
Composition of Asset Pool
Location of Asset Pool
Priority claim of bondholders
Role of the specific controller and the French Banking Commission (Commission Bancaire)

   3. Structured covered bonds
 
Background and legal framework
Location of issuer
Business of issuer
Characteristics of issuer
Issuance programme
Composition of Asset Pool
Law applicable to Asset Pool
Priority claim of bondholders
Role of the asset monitor

   Germany
 

   1. History
 
Some 240 years of Pfandbriefe
The Mortgage Bank Act of 1900 and related legislation
The overhaul of the legal regime: The Pfandbrief Act of 2005
Recent amendments to the Pfandbrief Act

   2. The market
 

   3. Summary of some basic characteristics of the law on Pfandbriefe
 
Fundamental principles of German Pfandbrief law
Qualifying issuers
Types of Pfandbriefe
Sources of regulation
Authorization
Prudential supervision
Asset Pools
Location of assets
Pfandbrief register
Trustee
Ring-fencing and insolvency

   4. Asset Pools
 
Asset Pool for mortgage Pfandbriefe
Asset Pool for public sector Pfandbriefe
Asset Pool for ship mortgage Pfandbriefe
Asset Pool for aircraft mortgage Pfandbriefe

   5. Ring-fencing and insolvency
 
Protection against enforcement measures of creditors
Separation from insolvency proceedings of the Pfandbrief Bank
Administrator for the Asset Pools
Management and liquidation of Asset Pools
Ring-fencing of undivided assets partially used as cover

   Luxembourg
 

   1. Background
 

   2. Location of issuer
 

   3. Structure of covered bond programmes
 

   4. Types of covered bonds
 

   5. Composition of Asset Pools
 
For public sector bonds
For mortgage bonds
For movable property bonds
Replacement of assets

   6. Location of Asset Pool
 

   7. Role of the CSSF and the special auditor
 

   8. Priority claim of the covered bond holders
 

   9. Over-collateralization
 

   The Netherlands
 

   1. Background
 
Proposal
General
Location of issuer
Structure of covered bond programmes
Composition of Asset Pool
Law applicable to Asset Pool
Priority claim of bondholders
Role of DCB
Registration
Bond issues after registration
Notification
Enforcement

   United Kingdom
 

   1. Background
 

   2. Proposals
 

   3. Location of issuer
 

   4. Business of issuers
 

   5. Structure of covered bond programmes
 

   6. Composition of Asset Pool
 

   7. Location of Asset Pool
 

   8. Priority claim of bondholders
 

   9. Role of the FSA
 
Registration
Notification
Enforcement

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