Coop Pank AS was granted a licence to issue covered bonds

At the proposal of Finantsinspektsioon, the European Central Bank gave Coop Pank AS a licence to issue covered bonds. At the same time, Finantsinspektsioon approved Coop Pank’s covered bonds programme.

For the bank, this means that they can start issuing mortgage-backed covered bonds under the terms and conditions put into place by Finantsinspektsioon. More specifically, the bank is only allowed to issue covered bonds when consumer loans backed by real estate, or housing loans are used as collateral. The bank must hold sufficient collateral in its covered bond portfolio after issuing covered bonds.

Covered bonds are different from other bonds because they are backed by the bank’s claims against its clients who have taken mortgage loans, and other assets permitted by law. Covered bonds can only be issued by banks who have applied for a separate licence extension from Finantsinspektsioon.