On Tuesday 30 May, MEPs discussed the possibility of establishing a pan-European framework for covered bonds, during the examination of a report within Parliament's 'economic and monetary affairs' committee.
Readers may recall that covered bonds are bonds the servicing of which (payment of interest and repayment of the capital) is covered by mortgage loans or claims on the public sector, for instance local authorities.
The own-initiative report presented proposes the creation of a European directive to define and draw a clear distinction between two types of assets: covered bonds (benefiting from the favourable treatment provided for in the CRR regulation) and European Secured Notes (for other securities that are incompatible with this definition).
Stressing the differences of opinion over the scope of application of these definitions, the Polish MEP Dariusz Rosati (EPP) proposed a compromise solution that would aim to create three categories rather than the two proposed - a compromise that seems to be acceptable, according to the rapporteur on the dossier, Bernd Lucke (ECR, Germany). The ALDE and Greens/EFA groups, for their part, are calling for a Commission impact assessment on the idea of a European Secured Note.
The report also warns against any compulsory harmonisation of the national models. The aim of this report is not to ban certain products from the market, but to lay down certain framework conditions, offering a higher level of security, the rapporteur explains.
The discussions gave rise to a broad consensus on the view that national and trans-national investments in covered bonds work well on the EU markets and that they should therefore not be changed unrecognisably, but be better integrated, on the basis of national best practice.
“When something works well, there is no immediate reason to change it”, Rosati said. Sven Giegold (Greens/EFA, Germany), said that standardisation at European level should not lead to reducing the existing standards to the lowest common denominator.
This report, on which a plenary vote is scheduled for 3 July, comes as part of the work being carried out by the European Commission with a view to improving the markets for covered bonds in Europe. The Commission is expected to clarify whether or not it intends to legislate on the subject as part of its mid-term revision of the Capital Markets Union, on 7 June (see EUROPE 11793). (Original version in French by Marion Fontana)