Frontpage News 2014 Danish Bankers Ass...

Danish Bankers Association is pleased about EU’s classification of mortgage credit bonds

10 October 2014

This Friday, the EU Commission announced the final liquidity rules for credit institutions where Danish mortgage credit bonds receive the highest qualification.
Danish mortgage credit bonds are weighed as securities with high credit quality and high liquidity. This was the final conclusion of the so-called LCR-requirements that define EU’s new liquidity rules for credit institutions, and the outcome of a lengthy process, where i.a. the Danish Government has worked persistently to ensure that the liquidity of Danish mortgage credit bonds are recognised like government bonds.
“The Danish Bankers Association is pleased about EU’s classification. It is positive that the EU Commission recognizes both the high credit quality and liquidity in the Danish mortgage credit bonds,” says Deputy Chief Executive, Louise M. Mogensen, who takes the opportunity to praise the effort of the Danish Government.
“We are grateful for the Danish Government’s effort that has been granted to fight the case for mortgage credit bonds through several years. It has been crucial to maintain the housing finance credit system, which we know and are pleased with in Denmark, and it also affects the way the Danish banks capitalise themselves,” says Louise C. Mogensen.
Danish mortgage credit bonds cannot be included 100 percent when a bank calculates so-called level 1 assets, but only up to 70 percent. Yet, the Danish Bankers Association is perfectly satisfied.
“Of course, we would have preferred full recognition of mortgage credit bonds, but we also recognize that a reasonable compromise has been reached. With the high classification, the Danish banks will be able to hold roughly the same amount of mortgage credit bonds for liquidity purposes, as they do today,” says Louise C. Mogensen, and adds:
"The solution is important for the Danish housing market and the Danish credit institutions, as it ensures the continued delivery of the very effective housing finance in Denmark. It is in everyone’s interest.”
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