Select Framework(s)
Results are displayed below
- Australia
- Australian Covered Bonds
- Austria
- FBS - Fundierte Bankschuldverschreibungen
- Pfandbriefe
- Belgium
- Belgium Covered Bonds
- Bulgaria
- Bulgarian Covered Bonds
- Canada
- Canadian Covered Bonds
- Chile
- Bonos Hipotecarios (BH) - Chilean Covered Bonds
- Cyprus
- Cypriot Covered Bonds
- Czech Republic
- Czech Republic Covered Bonds
- Denmark
- Realkreditobligationer - RO
- Særligt Dækkede Obligationer - SDO
- Særligt Dækkede Realkreditobligationer - SDRO
- Finland
- Finnish Covered Bonds
- France
- Caisse de Refinancement de l'Habitat - CRH
- General Law Based CBs
- Obligations Foncières - OF
- Obligations à l'Habitat - OH
- Germany
- Pfandbriefe
- Greece
- Greek Covered Bonds
- Hungary
- Hungarian Covered Bonds
- Iceland
- Icelandic Covered Bonds
- Ireland
- Asset Covered Securities - ACS
- Italy
- Obbligazioni Bancarie Garantite - OBG
- Luxembourg
- Lettres de Gage hypothécaires
- Lettres de Gage mobilières
- Lettres de Gage mutuelles
- Lettres de Gage publiques
- Netherlands
- Dutch registered CBs programmes
- New Zealand
- New Zealand Covered Bonds
- Norway
- Norwegian Covered Bonds
- Poland
- Polish Covered Bonds
- Portugal
- Mortgage CB (Obrigações Hipotecárias)
- Public Sector CB (Obrigações sobre o Sector Público)
- Romania
- Obligatiuni Ipotecare - Mortgage Covered Bonds
- Russia
- Mortgage Obligations
- Singapore
- Singapore Covered Bonds
- Slovakia
- Slovakian Covered Bonds
- Slovenia
- Slovenian Covered Bonds
- South Korea
- South Korean Covered Bonds
- Spain
- Cédulas Hipotecarias - CH
- Sweden
- Swedish Covered Bonds
- Switzerland
- Credit Suisse CB
- Swiss Pfandbriefe
- UBS CB
- Turkey
- Turkish Covered Bonds
- United Kingdom
- Regulated Covered Bonds - RCB
- Unregulated Covered Bonds
- United States
- US Covered Bonds
Select Chapter(s)
- I. STRUCTURE OF THE ISSUER
- II. FRAMEWORK
- III. COVER ASSETS
- IV. VALUATION OF THE MORTGAGE COVER POOL & LTV CRITERIA
- V. ASSET-LIABILITY GUIDELINES
- VI. COVER POOL MONITOR & BANKING SUPERVISION
- VII. SEGREGATION OF ASSETS & BANKRUPTCY REMOTENESS OF COVERED BONDS
- VIII. RISK WEIGHTING & COMPLIANCE WITH EUROPEAN LEGISLATION
- IX. ADDITIONAL INFORMATION
Questions | South Korean Covered Bonds |
---|---|
I. STRUCTURE OF THE ISSUER | |
1. Who is the issuer? |
|
(1) Comments: Banks licensed under the Bank Act, Industrial Bank of Korea, Korea Development Bank, NH Bank, National Federation of Fisheries Cooperative - Credit Business Division each of which with equity capital of not less than KRW 100 billion and BIS ratio of not less than 10%, Korea Housing Finance Corporation and Korea Finance Corporation | |
2. Does the bondholder have recourse to the credit institution? |
|
(2) Comments: Covered Bond holders, derivative counterparties related to Covered Bonds, other priority creditors including those with fees due shall have a priority right of payment on the registered Cover Pool over third parties. In case of bankruptcy of an issuer, the Cover Pool shall not be subject to bankruptcy proceeding, including compulsory execution, preservative measure and stay order with respect to such issuer. If the issuer becomes insolvent prior to repaying all of the principal of the Covered Bonds outstanding, the priority creditors have the right to participate in the bankruptcy proceedings of the issuers alongside other unsecured creditors of the issuer. | |
3. Who owns the cover assets? |
|
4. Is the issuer the originator of the assets? |
|
II. FRAMEWORK | |
1. Are the bonds governed by a special covered bond Legislation? |
|
(3) Comments: The Covered Bond Act was passed by the National Assembly of Korea on December 19, 2013 and will come into effect 3 months after it is promulgated | |
2. What is the legal framework for bankruptcy of the issuer of covered bonds? |
|
(4) Comments: The Covered Bond Act stipulates that the cover pools of the issuers which are registered with the Financial Supervisory Service will not be subject to insolvency proceedings of the issuers | |
III. COVER ASSETS | |
1. What types of assets may be included in cover pools? |
|
(5)
Comments: Cover Pool: residential mortgages, debts issued by public sector with LTV of less than 70%, vessel mortgages and aircraft mortgages with LTV of less than 70% Liquid Assets: liquid assets such as cash, Certificate of Deposits issued by other financial institutions with maturity shorter than 100 days Other assets: recoveries from Cover Pool or Liquid Assets, derivative instruments etc. The following liquid assets may be registered as Cover Pool up to a limit of 10% of total value of the Cover Pool. 1. Cash 2. Certificates of Deposit issued by other financial institutions with maturity shorter than 100 days 3. Deposits, overdraft facilities, discounted bills, credit card receivables etc with maturity shorter than 3 months 4. Debt issued by central or local governments of OECD member countries or the Kingdom of Saudi Arabia 5. Financial instruments similar to certificate of deposit with maturity shorter than 100 days which have been issued by central banks, commercial banks, investment banks, securities companies etc with an international credit rating of 'A' or above from either an OECD member country or the Kingdom of Saudi Arabia |
|
2. What is the geographical scope for public sector assets? |
|
3. What is the geographical scope for mortgage assets? |
|
4. Are regular covered bond specific disclosure requirements to the public mandatory? |
|
(6) Comments: The issuer and the Cover Pool monitor are required to submit quarterly reports to the financial regulatory authority using the form of report setting out details relating to Covered Bonds and Cover Pool. The issuer is required to publish such information on the relevant website and must include such details as notes to the annual report of such issuer. | |
IV. VALUATION OF THE MORTGAGE COVER POOL & LTV CRITERIA | |
1. LTV is calculated using which valuation?[4] |
|
2. Are there any special LTV limits used solely for calculating collateralisation rates for the cover pool (if yes, specify)? | |
(7) Comments: No | |
3. Do bondholders get the benefit of that portion of the loan which exceeds the LTV cap? |
|
(8) Comments: Portion of the assets which exceed the required LTV shall not be eligible cover asset but shall be treated as being part of the Cover Pool unless the Cover Pool registration with respect to such portion of assets are cancelled. The right of priority shall also not be affected. | |
4a. Is there an LTV cap which makes the entire loan ineligible to be put in the cover pool (if yes, specify)? |
|
(9) Comments: In all cases 70% | |
4b. Is there an LTV cap which would require a loan to be removed from the cover pool? |
|
(10) Comments: Assets which do not satisfy the LTV requirement will be non-eligible assets and must be replaced with assets which satisfy the eligibility criteria including the LTV ratio and the minimum coverage ratio should be maintained. | |
5. Is there any additional LTV limit on a portfolio basis? |
|
V. ASSET-LIABILITY GUIDELINES | |
. Exposure to market risk | |
1. Is exposure to market risk (e.g. interest rate, currency risks) required to be mitigated by law or contract? |
|
(11) Comments: The total value of Cover Pool is greater than or equal to 105% of the nominal value of the Covered Bonds outstanding | |
2. What is the primary method for the mitigation of market risk? |
|
(12) Comments: Where the currency of the Covered Bonds is different from the currency of the cover pool, the spot exchange rate prevailing on the calculation date shall be used to make the relevant calculations. Where the issuer has hedged its currency risk through derivative transactions, the exchange rate set out in such derivative contract may be utilised and the derivative counterparty will also be treated as a priority creditor under the Covered Bond Act. | |
3. If the answer to the above question on market risk mitigation is “Use of derivative hedge instruments”, please specify whether those instruments are entered into: | |
4. What type of coverage test is applied? |
|
(13) Comments: Where the cover pool consists of mortgages, any mortgages in arrears will be calculated by applying certain ratios and the other assets shall be valued using market values. Any assets which are not eligible assets and any derivative instruments entered into for hedging purposes shall be valued at '0'. | |
5. What is the frequency of coverage calculations? |
|
6. What types of stress scenarios are applied? |
|
7. What is the frequency of stress test calculations? |
|
. Exposure to liquidity risk | |
8. Is exposure to liquidity risk required to be mitigated by law or contract? |
|
(14) Comments: There are no separate provisions dealing with liquidity risk in the Covered Bond Act. There are no precedents as the Covered Bond Act has not yet come into effect but the covered bonds issued pursuant to the Korea Housing Finance Corporation Act requires the issuer to make contractual provisions for interest payments, commissions and fees payable for a certain period of time and it is expected that the covered bonds issued under the Covered Bond Act will also likely stipulate such reserve requirements to mitigate liquidity risk by way of contractual provisions. | |
9. What is the primary method for the mitigation of liquidity risk on interest payments? |
|
10. What is the primary method for the mitigation of liquidity risk on principal payments? |
|
11. Is there any grace period in case of a breach of liquidity risk mitigants? | |
12. What is the consequence of not fixing a breach of liquidity risk mitigants? | |
. Monitoring of exposures to market and liquidity risk | |
13. Who monitors the maintenance of coverage tests? |
|
14. Are there any regular public reporting requirements for market and liquidity risk? |
|
. Overcollateralisation | |
15. Is mandatory minimum overcollateralisation required? |
|
16. What is the level of minimum mandatory overcollateralisation? |
|
(15) Comments: The total value of Cover Pool (public valuation) is greater than or equal to 105% of the Covered Bonds outstanding. | |
17. If mandatory overcollateralisation is required, are the amounts above the minimum OC level protected? |
|
18. Is there any grace period in case of a breach of the coverage test? |
|
19. What is the consequence of not fixing a breach of the coverage test? |
|
VI. COVER POOL MONITOR & BANKING SUPERVISION | |
1. Is a special license required for the issuing of covered bonds? |
|
2. Are there special reporting duties of the covered bond issuer to the supervision authority concerning covered bonds and the cover pool, which go beyond the regular banking supervision? |
|
3. What is the role of the banking supervision regarding covered bonds? |
|
4. Is there a special role of banking supervision in crisis regarding covered bonds? |
|
5. Is there a cover pool monitor independent from the issuer? |
|
(16) Comments: It must be an entity who was not a 'special relation person' of the issuer in the preceding 3 years | |
6. If there is an independent cover pool monitor, what are its duties? |
|
(17)
Comments: 1. Monitor and evaluate the issuer's issue plans and compliance with the relevant laws and regulations 2. Require compliance of the issuer 3. direct and supervise the trustee's operations 4. any legal or non-legal actions related to managing and disposing of primary assets for the priority creditors |
|
VII. SEGREGATION OF ASSETS & BANKRUPTCY REMOTENESS OF COVERED BONDS | |
1. Do covered bonds automatically accelerate when the credit institution goes insolvent? |
|
2. What is the cover pool? |
|
3. How are the covered bondholders protected against claims from other creditors in case of insolvency of the issuer? |
|
4. Is there recourse to the credit institution’s insolvency estate upon a cover pool default? |
|
5. Are there provisions that require derivatives to continue in case of insolvency of the credit institution? |
|
(18) Comments: It is expected that derivative contracts may be required to continue by way of contractual provisions as the derivative counterparty is also a priority creditor under the Covered Bond Act | |
6. If derivatives are permitted in the cover pool, what is their ranking? |
|
VIII. RISK WEIGHTING & COMPLIANCE WITH EUROPEAN LEGISLATION | |
1. Does the covered bond fulfil the criteria of UCITS 52(4)? |
|
2. For further information regarding the compliance to the criteria of Article 129 of the Capital Requirements Regulation (CRR), please see the following links: http://ecbc.hypo.org/Content/default.asp?PageID=504#position https://www.coveredbondlabel.com |
|
3. Are listed covered bonds eligible in repo transactions with the national central bank? |
|
4. Are there any special investment regulations regarding covered bonds? |
|
IX. ADDITIONAL INFORMATION | |
1. Link to National Association representing covered bond interests |
|
2. Link to national regulators and supervisors |
|
(19) Comments: The structured covered bonds were issued by Kookmin Bank pursuant to the Asset Backed Securities Act in May 2009 and the Korea Housing Finance Corporation issued statutory covered bonds pursuant to the Korea Housing Finance Corporation Act in July 2010 with subsequent issues of both cross border and domestic statutory covered bonds. | |
3. Fact Book Country Chapter |
|
4. Hypostat Country Chapter |
|
Comments for your selection