European Covered Bond Council

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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

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

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Questions	Norwegian Covered Bonds
I. STRUCTURE OF THE ISSUER
1. Who is the issuer?	Specialized 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 No
	(1) Comments: Loans are originated partly by the issuer, partly acquired from parent bank or from another bank.
II. FRAMEWORK
1. Are the bonds governed by a special covered bond Legislation?	Yes
2. What is the legal framework for bankruptcy of the issuer of covered bonds?	Specific legal framework superseding the general insolvency law
	(2) Comments: Global comments for this chapter:http://www.fno.no/en/Covered-Bonds/legislation1/.
	(3) Global comments for this chapter:http://www.fno.no/en/Main/Covered-Bonds/legislation1/
III. COVER ASSETS
1. What types of assets may be included in cover pools?	Exposures to public sector entities Mortgage loans (Mortgage loans for the purpose of this question are taken to include guaranteed real-estate loans.) Senior MBS issued by third parties Exposures to credit institutions
	(4) Comments: Exposures to public sector entities, mortgages, derivative contracts, and substitute assets. Substitute assets may not exceed 20 % of cover pool and may include: covered bonds and MBS issued in an EEA country, and which qualify for credit quality step 1, as well as government bonds and other highly liquid and secure assets. Total exposure to credit institutions which qualify for credit quality step 1 or 2 (derivatives and substitute assets) may not exceed 15 % of nominal value of outstanding bonds. Exposures to credit institutions which qualify for credit quality step 2 shall not exceed 10 % of nominal value of outstanding bonds, cf. CRR article 129(1)(c).
2. What is the geographical scope for public sector assets?	Domestic EEA OECD
	(5) Comments: Only countries where the state has a credit rating by a ECAI of credit quality step 2.
3. What is the geographical scope for mortgage assets?	Domestic EEA OECD
	(6) Comments: EEA and OECD countries, only countries where the state has a credit rating by a ECAI of credit quality step 2 (today mainly domestic).
4. Are regular covered bond specific disclosure requirements to the public mandatory?	No
	(7) Comments: All large and medium size issuers publish cover pool data quarterly; see: http://www.fno.no/en/Main/Covered-Bonds/CBIC-European-Transparency-Standards/
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 75% Commercial 60%
	(8) Comments: Second homes (holiday): 60%
3. Do bondholders get the benefit of that portion of the loan which exceeds the LTV cap?	Yes
4a. Is there an LTV cap which makes the entire loan ineligible to be put in the cover pool (if yes, specify)?	Residential Commercial
	(9) Comments: Residential - 75%; Commercial - 60% If the LTV of a loan subsequent to inclusion exceeds the limit (the value of the property has decreased after inclusion), the loan stays in the pool, but only that part that is within LTV 75/60 % is taken into account when calculating the size of the cover pool.
4b. Is there an LTV cap which would require a loan to be removed from the cover pool?	No
	(10) Comments: It is not required to remove the loan from the cover pool once included but it does not count when testing the coverage. The same applies to NPL (>90 days).
5. Is there any additional LTV limit on a portfolio basis?	No
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?	Yes
	(11) Comments: According to the Norwegian legislation, a mortgage credit institution shall not assume greater interest rate or foreign exchange risk than what is prudent at any and all times. A mortgage credit institution is obliged to establish limits on foreign exchange risk and interest rate risk.
2. What is the primary method for the mitigation of market risk?	Use of derivative hedge instruments
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:	By the time of issue of covered bonds or entry of asset in the cover pool
4. What type of coverage test is applied?	Present value cover
	(12) Comments: The law requires: (1) Value cover, i.e. prudent market value (assets and derivative contracts) and net present value (issued bonds) cover (2) Payment flows cover.
5. What is the frequency of coverage calculations?	Daily
6. What types of stress scenarios are applied?	Static Dynamic
	(13) Comments: Stress tests are required to test the value cover and the liquidity risk. Normally stress tests on interest rate changes, currency movements and declining house prices are also performed.
7. What is the frequency of stress test calculations?	Other
	(14) Comments: Periodically
. Exposure to liquidity risk
8. Is exposure to liquidity risk required to be mitigated by law or contract?	Yes
9. What is the primary method for the mitigation of liquidity risk on interest payments?	“Natural” matching (matching without the use of off-balance sheet instruments) and stress testing (Natural matching is taken to include replacing CBs with new issues, as well as substitute assets.) Liquidity facilities
10. What is the primary method for the mitigation of liquidity risk on principal payments?	Natural matching (matching without the use of off-balance sheet instruments) and stress testing Liquidity facilities Contractual arrangements, e.g. maturity extension or prematurity test
11. Is there any grace period in case of a breach of liquidity risk mitigants?	No
	(15) Comments: It is the supervisor who decides how to respond in case of any breach.
12. What is the consequence of not fixing a breach of liquidity risk mitigants?	Other regulatory or rule-based action
. Monitoring of exposures to market and liquidity risk
13. Who monitors the maintenance of coverage tests?	Rating agency Trustee/cover pool monitor
14. Are there any regular public reporting requirements for market and liquidity risk?	Yes
	(16) Comments: The issuing institution is required to publish quarterly financial reports.
. Overcollateralisation
15. Is mandatory minimum overcollateralisation required?	By legislation/regulation By contractual obligation By published voluntary commitments
	(17) Comments: The law requires that the value of the cover pool shall exceed the value of the covered bonds at all times. Individual issuers may commit themselves to a given minimum OC.
16. What is the level of minimum mandatory overcollateralisation?
	(18) Comments: The law requires that the value of the cover pool shall exceed the value of the covered bonds. No specific OC level is required by law.
17. If mandatory overcollateralisation is required, are the amounts above the minimum OC level protected?	Yes
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
	(19) Comments: Supervisor’s intervention: Supervisor may i.a. disallow or suspend new issuance of CBs.
VI. COVER POOL MONITOR & BANKING SUPERVISION
1. Is a special license required for the issuing of covered bonds?	Yes with additional requirements compared to general banking supervision regulations
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 Reporting on demand for special occasions
	(20) Comments: The report goes from the monitor of the cover pool (appointed by the FSA) to the FSA at least once a year or if special occasion occurs.
3. What is the role of the banking supervision regarding covered bonds?	To check whether eligibility criteria are fulfilled and documented Checking quality of cover assets (real estate valuations, etc) To check minimum mandatory overcollateralisation requirements
	(21) Comments: Supervision is performed by the cover pool monitor on behalf of the supervisor.
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
	(22) Comments: The monitor is appointed by the supervisor.
6. If there is an independent cover pool monitor, what are its duties?	Reporting duties to the supervision authority Verification of coverage tests Other, please specify: Verification of cover pool register
VII. SEGREGATION OF ASSETS & BANKRUPTCY REMOTENESS OF COVERED BONDS
1. Do covered bonds automatically accelerate when the credit institution goes insolvent?	No
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 Specific cover pool administration
4. Is there recourse to the credit institution’s insolvency estate upon a cover pool default?	Yes, pari passu with unsecured creditors
5. Are there provisions that require derivatives to continue in case of insolvency of the credit institution?	Yes
6. If derivatives are permitted in the cover pool, what is their ranking?	Pari passu to covered bond holders
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?	Yes
4. Are there any special investment regulations regarding covered bonds?	Yes
	(23) Comments: Special and wide limits for banks and insurance companies' investments in covered bonds in the large exposure regulations, as well as large investment limits for mutual funds.
IX. ADDITIONAL INFORMATION
1. Link to National Association representing covered bond interests	Association The Norwegian Covered Bond Council
	'Norwegian covered bond market' brochure from Norwegian Financial Services Association and the Norwegian Savings Banks Association
2. Link to national regulators and supervisors	List Finanstilsynet - Financial Supervisory Authority of Norway
3. Fact Book Country Chapter	Chapter
	Norway.pdf
4. Hypostat Country Chapter	Chapter

Comments for your selection

1: Loans are originated partly by the issuer, partly acquired from parent bank or from another bank.
2: Global comments for this chapter:http://www.fno.no/en/Covered-Bonds/legislation1/.
3: http://www.fno.no/en/Main/Covered-Bonds/legislation1/
4: Exposures to public sector entities, mortgages, derivative contracts, and substitute assets. Substitute assets may not exceed 20 % of cover pool and may include: covered bonds and MBS issued in an EEA country, and which qualify for credit quality step 1, as well as government bonds and other highly liquid and secure assets. Total exposure to credit institutions which qualify for credit quality step 1 or 2 (derivatives and substitute assets) may not exceed 15 % of nominal value of outstanding bonds. Exposures to credit institutions which qualify for credit quality step 2 shall not exceed 10 % of nominal value of outstanding bonds, cf. CRR article 129(1)(c).
5: Only countries where the state has a credit rating by a ECAI of credit quality step 2.
6: EEA and OECD countries, only countries where the state has a credit rating by a ECAI of credit quality step 2 (today mainly domestic).
7: All large and medium size issuers publish cover pool data quarterly; see: http://www.fno.no/en/Main/Covered-Bonds/CBIC-European-Transparency-Standards/
8: Second homes (holiday): 60%
9: Residential - 75%; Commercial - 60% If the LTV of a loan subsequent to inclusion exceeds the limit (the value of the property has decreased after inclusion), the loan stays in the pool, but only that part that is within LTV 75/60 % is taken into account when calculating the size of the cover pool.
10: It is not required to remove the loan from the cover pool once included but it does not count when testing the coverage. The same applies to NPL (>90 days).
11: According to the Norwegian legislation, a mortgage credit institution shall not assume greater interest rate or foreign exchange risk than what is prudent at any and all times. A mortgage credit institution is obliged to establish limits on foreign exchange risk and interest rate risk.
12: The law requires: (1) Value cover, i.e. prudent market value (assets and derivative contracts) and net present value (issued bonds) cover (2) Payment flows cover.
13: Stress tests are required to test the value cover and the liquidity risk. Normally stress tests on interest rate changes, currency movements and declining house prices are also performed.
14: Periodically
15: It is the supervisor who decides how to respond in case of any breach.
16: The issuing institution is required to publish quarterly financial reports.
17: The law requires that the value of the cover pool shall exceed the value of the covered bonds at all times. Individual issuers may commit themselves to a given minimum OC.
18: The law requires that the value of the cover pool shall exceed the value of the covered bonds. No specific OC level is required by law.
19: Supervisor’s intervention: Supervisor may i.a. disallow or suspend new issuance of CBs.
20: The report goes from the monitor of the cover pool (appointed by the FSA) to the FSA at least once a year or if special occasion occurs.
21: Supervision is performed by the cover pool monitor on behalf of the supervisor.
22: The monitor is appointed by the supervisor.
23: Special and wide limits for banks and insurance companies' investments in covered bonds in the large exposure regulations, as well as large investment limits for mutual funds.