» Show / Hide

Select Framework(s)

Results are displayed below
Questions Czech Republic Covered Bonds
I. STRUCTURE OF THE ISSUER
1. Who is the issuer?
  • Universal credit institution
2. Does the bondholder have recourse to the credit institution?
  • Yes, direct
3. Who owns the cover assets?
  • The issuer directly
4. Is the issuer the originator of the assets?
  • Yes
II. FRAMEWORK
1. Are the bonds governed by a special covered bond Legislation?
  • Yes
(1) Comments: Governed by the Bond Act no. 190/2004 Coll.
2. What is the legal framework for bankruptcy of the issuer of covered bonds?
  • General insolvency law
III. COVER ASSETS
1. What types of assets may be included in cover pools?
  • Mortgage loans (Mortgage loans for the purpose of this question are taken to include guaranteed real-estate loans.)
2. What is the geographical scope for public sector assets?
(2) Comments: Not relevant as PSA may not be included in a cover pool
3. What is the geographical scope for mortgage assets?
  • EEA
4. Are regular covered bond specific disclosure requirements to the public mandatory?
  • No
IV. VALUATION OF THE MORTGAGE COVER POOL & LTV CRITERIA
1. LTV is calculated using which valuation?[4]
  • Market value
2. Are there any special LTV limits used solely for calculating collateralisation rates for the cover pool (if yes, specify)?
  • Residential      
  • Commercial      
  • Agricultural
(3) Comments: 70% portfolio LTV limit is required. By "Agricultural" we understand "Agricultural land and/or buildings"
3. Do bondholders get the benefit of that portion of the loan which exceeds the LTV cap?
  • Yes
(4) Comments: Yes, provided that the portfolio LTV limit (70%) is not met.
4a. Is there an LTV cap which makes the entire loan ineligible to be put in the cover pool (if yes, specify)?
  • Residential      
  • Commercial      
  • Agricultural      
(5) Comments: LTV cap for residential, commercial and agricultural is 200%

Yes, a loan is ineligible if the individual LTV exceeds 200%. By "Agricultural" we understand "Agricultural land and/or buildings"
4b. Is there an LTV cap which would require a loan to be removed from the cover pool?
  • Residential      
  • Commercial      
  • Agricultural      
(6) Comments: Yes, if the individual LTV exceeds 200%. By "Agricultural" we understand "Agricultural land and/or buildings"
5. Is there any additional LTV limit on a portfolio basis?
  • No
(7) Comments: No other than the 70% portfolio LTV limit.
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?
  • No
2. What is the primary method for the mitigation of market risk?
(8) Comments: Not relevant as no derivatives are eligible to be included in a cover pool.
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:
  • Not relevant
4. What type of coverage test is applied?
  • Nominal cover
5. What is the frequency of coverage calculations?
  • Daily
(9) Comments: The bank has to be able to prove the coverage has always been sufficient.
6. What types of stress scenarios are applied?
  • Not relevant
7. What is the frequency of stress test calculations?
  • Not relevant
. Exposure to liquidity risk
8. Is exposure to liquidity risk required to be mitigated by law or contract?
  • No
9. What is the primary method for the mitigation of liquidity risk on interest payments?
(10) Comments: Not relevant as the liquidity risk of a cover pool is not required to be mitigated. The liquidity risk is, however, managed by a bank but not isolated from other (i.e. not eligible for a cover pool) transactions.
10. What is the primary method for the mitigation of liquidity risk on principal payments?
(11) Comments: Not relevant as the liquidity risk of a cover pool is not required to be mitigated. The liquidity risk is, however, managed by a bank but not isolated from other (i.e. not eligible for a cover pool) transactions.
11. Is there any grace period in case of a breach of liquidity risk mitigants?
(12) Comments: Not relevant as there are no liquidity risk mitigants defined.
12. What is the consequence of not fixing a breach of liquidity risk mitigants?
(13) Comments: Not relevant as there are no liquidity risk mitigants defined.
. Monitoring of exposures to market and liquidity risk
13. Who monitors the maintenance of coverage tests?
  • Supervisory authority
  • Rating agency
  • Trustee/cover pool monitor
(14) Comments: Rating agency and Trustee not as statutory monitors but on contractual basis only.
14. Are there any regular public reporting requirements for market and liquidity risk?
  • Yes
(15) Comments: Under CRD IV, CRR and related rules/legislation applicable to a credit institution as the Issuer, not specific to covered bonds and cover pool.
. Overcollateralisation
15. Is mandatory minimum overcollateralisation required?
(16) Comments: No, but may be established contractually.
16. What is the level of minimum mandatory overcollateralisation?

  • 0%
(17) Comments: See V.15
17. If mandatory overcollateralisation is required, are the amounts above the minimum OC level protected?
  • No
18. Is there any grace period in case of a breach of the coverage test?
  • No
19. What is the consequence of not fixing a breach of the coverage test?
  • Programme freeze (neither sale of assets nor new issuance allowed)
  • Alternative administration
  • Other regulatory or rule-based actions
  • Event of default of the issuer
VI. COVER POOL MONITOR & BANKING SUPERVISION
1. Is a special license required for the issuing of covered bonds?
  • No, but with additional requirements
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?
  • Periodic reporting required
3. What is the role of the banking supervision regarding covered bonds?
  • To check whether eligibility criteria are fulfilled and documented
4. Is there a special role of banking supervision in crisis regarding covered bonds?
  • No specific role
5. Is there a cover pool monitor independent from the issuer?
  • Yes
(18) Comments: Not an obligatory person, on contractual basis only.
6. If there is an independent cover pool monitor, what are its duties?
  • Other, please specify:      
    Depending on the contract between an issuer and a cover pool monitor
VII. SEGREGATION OF ASSETS & BANKRUPTCY REMOTENESS OF COVERED BONDS
1. Do covered bonds automatically accelerate when the credit institution goes insolvent?
  • Yes
2. What is the cover pool?
  • All assets on the cover register
3. How are the covered bondholders protected against claims from other creditors in case of insolvency of the issuer?
  • Preferential claim by law
4. Is there recourse to the credit institution’s insolvency estate upon a cover pool default?
  • Yes, senior to unsecured creditors
5. Are there provisions that require derivatives to continue in case of insolvency of the credit institution?
  • No
(19) Comments: Derivatives are not permitted in the cover pool.
6. If derivatives are permitted in the cover pool, what is their ranking?
(20) Comments: Derivatives are not permitted in the cover pool.
VIII. RISK WEIGHTING & COMPLIANCE WITH EUROPEAN LEGISLATION
1. Does the covered bond fulfil the criteria of UCITS 52(4)?
  • Yes
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?
  • No
(21) Comments: Covered bonds are not eligible in repo transactions with Czech National Bank.
4. Are there any special investment regulations regarding covered bonds?
  • No
IX. ADDITIONAL INFORMATION
1. Link to National Association representing covered bond interests
(22) Comments: The CBA's activities are not limited to covered bonds only. The association deals with other areas of banking business too.
2. Link to national regulators and supervisors
  • List
3. Fact Book Country Chapter
  • Chapter
 
4. Hypostat Country Chapter
  • Chapter
 

Comments for your selection

  • 1: Governed by the Bond Act no. 190/2004 Coll.
  • 2: Not relevant as PSA may not be included in a cover pool
  • 3: 70% portfolio LTV limit is required. By "Agricultural" we understand "Agricultural land and/or buildings"
  • 4: Yes, provided that the portfolio LTV limit (70%) is not met.
  • 5: LTV cap for residential, commercial and agricultural is 200% Yes, a loan is ineligible if the individual LTV exceeds 200%. By "Agricultural" we understand "Agricultural land and/or buildings"
  • 6: Yes, if the individual LTV exceeds 200%. By "Agricultural" we understand "Agricultural land and/or buildings"
  • 7: No other than the 70% portfolio LTV limit.
  • 8: Not relevant as no derivatives are eligible to be included in a cover pool.
  • 9: The bank has to be able to prove the coverage has always been sufficient.
  • 10: Not relevant as the liquidity risk of a cover pool is not required to be mitigated. The liquidity risk is, however, managed by a bank but not isolated from other (i.e. not eligible for a cover pool) transactions.
  • 11: Not relevant as the liquidity risk of a cover pool is not required to be mitigated. The liquidity risk is, however, managed by a bank but not isolated from other (i.e. not eligible for a cover pool) transactions.
  • 12: Not relevant as there are no liquidity risk mitigants defined.
  • 13: Not relevant as there are no liquidity risk mitigants defined.
  • 14: Rating agency and Trustee not as statutory monitors but on contractual basis only.
  • 15: Under CRD IV, CRR and related rules/legislation applicable to a credit institution as the Issuer, not specific to covered bonds and cover pool.
  • 16: No, but may be established contractually.
  • 17: See V.15
  • 18: Not an obligatory person, on contractual basis only.
  • 19: Derivatives are not permitted in the cover pool.
  • 20: Derivatives are not permitted in the cover pool.
  • 21: Covered bonds are not eligible in repo transactions with Czech National Bank.
  • 22: The CBA's activities are not limited to covered bonds only. The association deals with other areas of banking business too.