Frameworks from France

Comments for your selection

• 1: The issuer is a duly licensed credit institution but with a limited purpose.
• 2: Société de Financement de l'Habitat
• 3: Sociétés de crédit foncier ("SCFs") are the French special-law based covered bonds issuers. They are governed by Article L.515-13 and seq. of the French Monetary and Financial Code (the "Code") relating to SCFs and, as credit institutions, by the general banking regulation including Regulation 97-02 of 21 February 1997 relating to internal control in credit institutions and investment companies.
• 4: direct recourse to CRH, indirect recourse to borrowing credit institutions
• 5: Direct to the Issuer which is a credit institution by benefiting of a pledge over all its assets and indirect one towards the originator/sponsor bank
• 6: borrowing credit institution, but pledged to CRH that becomes fully owner of them in case of default because of specific provisions of French law governing CRH
• 7: Assets automatically transferred to the Issuer upon default of originator/sponsor bank as pledge of assets (financial guarantee) based on European collateral directive (L 211-36 and Seq French Financial Monetary Code) which supersedes general insolvency law
• 8: Article L. 515-19 provides a security to the benefit of the bondholders.
• 9: The originator is the sponsor bank. The Issuer is fully-owned by the sponsor bank and bears the name of the sponsor bank ie BNP Paribas Home Loan Covered Bonds (SA)
• 10: Art. L.515-35
• 11: Under Article L.515-13 of the Code, SCFs are allowed either to grant or to buy mortgage loans or exposures on public sector but generally, they are not the originator of the assets.
• 12: Yes, dedicated to CRH
• 13: However, Bondsholders benefit from a pledge governed by French Civil code over all the Issuer's assets which allow them to have a contractual privilege, instead of legal one, over them.
• 14: Article L. 515-34 and seq. of the French Monetary and Financial code.
• 15: To be underlined : the transposition of the Collateral directive implemented to pledge the assets supersedes the common insolvency law : the assets may be transfered even if the originator is already bankrupt.
• 16: Article L. 515-27 of the French Monetary and Financial code excluding any extention of insolvency procedure of the parent company of the issuer.
• 17: The special bankruptcy regime applicable to the SCF results from Articles L.515-19 and Articles L.515-25 to L.515-27 of the Code. The main features of this regime are as follow: -the judicial liquidation of a SCF does not accelerate the payment of the privileged debts of the SCF that are paid on their contractual due date and with priority over all other debts. -until the privileged debtors are fully paid off, no other creditor of the SCF may avail itself of any right over the SCF's property and rights. -the judicial reorganisation or liquidation of a company holding shares in the SCF can’t be extended to the SCF. As a result, SCFs are totally bankruptcy remote and enjoy full protection from the risks of default by their parent company or by the group to which they belong.
• 18: other types of assets are allowed as substitute assets
• 19: Exposures on public sector entities under leasing format are also allowed.
• 20: not relevant
• 21: NA for existing programmes as all home loan programmes
• 22: Not applicable.
• 23: Others are, as more described in Article L.515-15 of the Code, Central administrations and Central banks not belonging to the above mentioned geographic scope but to States qualifying as a minimum for the credit quality assessment step 1 (step 2 up to 20% of the privileged liabilities) by a rating agency recognised by the French banking supervisor.
• 24: France only
• 25: Countries with the best possible rating with one of the rating agencies recognised by the French banking supervisor. In practise, SFHs have solely domestic loans for now.
• 26: Others are States not belonging to the above ticked geographic scope but qualifying as a minimum for the credit quality assessment step 1 by a rating agency recognised by the French banking supervisor.
• 27: They are done on a quarterly and yearly basis to the market through reports accessible to investors on a dedicated website.
• 28: Quarterly publication on the cover pool.
• 29: In addition to the above mentioned assets, SCFs are allowed to hold replacement assets up to 15% of the amount of their outstanding privileged debt issued(covered bonds and other debt issued benefiting from the privilège of Article L515-19 of the Code). Replacement assets are defined as sufficiently secure and liquid assets as more described in Articles L.515-17 and R.515-7 of the Code.
• 30: provisions of French Banking Comitee regulation 99-10 relative to sociètés de crédit foncier chapter 1
• 31: indexation applied (80% of increase in value 100% of decrease)
• 32: According to Regulation 99-10 relating to SCFs, real estate properties are valued on a yearly basis. They are valued conservatively, excluding any element of a speculative nature. Valuations have to be made on the basis of the lasting, long-term characteristics of the real estate properties, normal market and local conditions, the current use of the real estate and other uses to which it could be assigned. This mortgage lending value shall be determined clearly and transparently in writing and may not exceed the market value.
• 33: Only loan amounts up to 80% LTV are taken into account in the asset test.
• 34: Pursuant to Article R.515-2 of the Code, a mortgage or guaranteed loan can only be refinanced by privileged debts in the limit of the smallest following amount : - the outstanding principal amount of the loan, - the product of the financing share of the loan and the value of the real estate. The financing share of the loan is equal to: - 60 per cent of the value of the real estate given in guarantee, - 80 per cent of the value of the real estate given in guarantee when the loan has been granted to individuals in order to finance the building or the acquisition of a housing or in order to finance the acquisition of the building land and the construction of the housing. - 100 per cent of the value of the real estate when the loan benefit from the guarantee of the Guarantee Fund for Social Home Ownership (FGAS). The acquisition by a SCF of senior units of RMBS is subject to similar rules as more described in Article 5.515-4 of the Code.
• 35: all loans over 100% LTV are not eligible
• 36: Only loan amounts up to 80% LTV are taken into account in the asset test.
• 37: Only loan amounts up to 80% LTV are taken into account in the asset test.
• 38: by law perfect matching between assets and liabilities
• 39: all risk is fully hedged by swaps compliant with criteria of rating agencies for such swaps
• 40: SCFs are required to comply with numbers of specific management rules intended to ensure matching of assets and liabilities in terms of interest rates and maturities. Exposure to market risk is required to be mitigated by Regulation 97-02 of 21 February 1997 relating to internal control in credit institutions and investment companies.
• 41: by law perfect matching between assets and liabilities
• 42: Test for coverage of CRH's loans to banks
• 43: The SCF must ensure that it comply, at any time, with the regulation relating to the coverage ratio and ALM congruency.
• 44: by law
• 45: By law. Under Article R.515-7-1 of the Code, SCF must, at any time, manage their liquidity risk over a period of 180 days. In addition to specific rules, SCF are required to comply with Regulation 97-02 of 21 February 1997 relating to internal control in credit institutions and investment companies. Exposure to liquidity risk is required to be mitigated by Article 31 of Regulation 97-02.
• 46: by law perfect natural matching,furthermore liquidity facilities in some conditions from French banks if CRH needs
• 47: interest rate risk fully mitigated via hedging contracts and collateralised loan mechanism, Various additional contractual arrangements in place like the pre-maturity test
• 48: Replacement assets are a key instrument to achieve the "natural" matching. In addition the SCF have a direct access to the French Central Bank as credit institutions, even after the bankruptcy of the mother company. The law allow them to enter into repo transactions.
• 49: by law perfect natural matching,furthermore liquidity facilities in some conditions from French banks if CRH needs and period of 5 business days between date of repaiement of borrowing banks and maturity date of CRH's bonds in order to be able to call liquidity facilities
• 50: breach of perfect matching is coming from a default of a borrowing bank. In that case, CRH may become owner of cover pool
• 51: see answer Q V.11
• 52: temporary breach means no further issue and could eventually result in event of default if not solved in following periods
• 53: furthermore, not borrowing for itself and independant from borrowers, CRH monitors coverage of its loans to banks
• 54: Other is the Specific controller created by Article L.515-30 of the Code.The specific controller according to Regulation 99-10, controls the adequate matching of maturities and interest rates and alerts the French Commission Bancaire should he considers the levels are insufficient.
• 55: not relevant in a normal situation by law perfect matching between assets and liabilities
• 56: 25%
• 57: means just over 8% minimum overcollateralisation
• 58: 2% is level required by the law, and 8,1 % in the documentation.
• 59: Article L.515-20 of the Code requires that, at any time, the total amount of the SCF’s assets must be greater than the outstanding amount of its privileged debt. The 102% minimm level of overcollateralization is provided in Article R.515-7-2 of the Code.
• 60: see comments next question
• 61: the borrowing bank is obliged to add eligible collateral or to pay back CRH by delevering to CRH CRH's bonds related to its borrowing
• 62: In addition to all measures aiming at ensuring the liquidity of the SCF, SCF are incorporated as credit institutions and have a direct access to the French Central Bank refinancing, even after the bankruptcy of the mother company. The law allows them to enter into repo transactions.
• 63: the issuer is specifically licensed by the French banking authorities and frequent reporting is provided.
• 64: As for all credit institution, the banking authorities supervise regularly the issuer on, at least, a quaterly basis, perform missions to audit the Issuer and may ask for specific requests at any time.
• 65: Done by the specific controller.
• 66: As for all credit institution, the banking authorities may implement all actions they may consider as necessary to safe the rights of the credit institution creditors.
• 67: French banking authority in a special legal audit Furthermore, CRH independant from borrowing banks audits coverpool, verifies coverage tests and reports to Authorities
• 68: There is an Asset Monitor and a specific controller.
• 69: The cover pool monitor independent from the issuer is the Specific controller created by Article L.515-30 of the Code.
• 70: The monitor has contractually the same role as the specific controler in an "société de crédit foncier" issuing legal covered bonds.
• 71: There is an Asset Montor and a specific controller who gives a sepcial authorization for any issue superior to 500 mio euros.
• 72: However, Bondsholders benefit from a pledge governed by French Civil code over all the Issuer's assets which allow them to have a contractual privilege, instead of legal one, over them.
• 73: They benefit from the privilege of article L.515-19 of the Code under which the have the right to be paid by preference to all others creditors including the State.
• 74: The bondsholders are senior to all creditors of issuer. In case of bankruptcy of the originator, the Issuer exercice the financial guarantee over the pledged assets. If there is on outsdanding amount, the issuer has an unsecured right towards the originator/borrower, pari passu with others
• 75: All the assets of the OFs issuing credit institution secure the OFs and other privileged debtors of the credit institution.
• 76: not relevant
• 77: not relevant
• 78: The sums due under the derivatives entered into by SCFs to cover their assets and liabilities elements and to manage or cover the global risk on their assets, liabilities and off-balance-sheet items have privileged status. The sums due under derivatives used to cover the non-privileged debts of the SCF do not have such privileged status.