Source: http://www.ecbc.eu/framework/93/Cypriot_Covered_Bonds
Timestamp: 2019-04-23 19:09:13+00:00

Document:
Comments: According to the provisions of the Law, the Issuer needs to be an "approved institution"; i.e. a credit insitution registered in the register of approved institutions in accordance with the provisions of Part II of the Law.
Comments: According to Art.43(5) of the Law, in case where the claims of the cover pool creditors are not satisfied in full from the proceeds of disposal of the cover pool, those creditors are, with respect to the unsatisfied part of the their claims, unsecured creditors of the institution with covered bond obligations that is subject to dissolution proceedings.
Comments: According to Art.23 of the Law, the cover assets are maintained in a cover pool register for each covered bond issue or programme, in the form, location and content determined by the competent authority.
Comments: Law 130(I)/2010 of the Republic of Cyprus and the Central Bank of Cyprus Directive 526/2010.
Comments: Part VII of the Law, deals with the effect of dissolution proceedings on an institution with covered bond obligations (not affecting though the application of specific provisions of the Bankruptcy Law, the Companies Law and any other Law thatwould render any bond or contract void or voidable on the ground of fraud or misrepresentation - Art.45 of the Law).
(v) Other asset that the competent authority may determine as primary asset (for now the only Primary Assets allowed for, are the ones listed in Art.14(d) of the Law (i) – (iv)).
Comments: Art.14 of the Directive outlines in detail the geographical scope for public sector assets (and in general the criteria, terms and conditions in relation to public claims). These are largely limited to local and member state public entities, as well as entities falling under Step 1 of Table 3 of Annex VI of the Directive 2006/48/EC.
Comments: According to Art.13(3)(b) of the Directive, mortgage assets need to be created in accordance with the laws of the Republic of Cyprus, or in accordance with the laws of other member states.
Comments: Accordng to Art.31 of the Law, an institution with covered bond obligations shall disclose in its annual and interim financial statements and publish at regular intervals determined by the competent authority information on the covered bonds issued by it and the cover assets registered in the cover pool register, as determined by the competent authority.
Comments: According to Art.13(10) of the Directive, the valuation of the underlying property for the purposes of calculating compliance with the LTV limits, shall be carried out by an independent valuer.
Comments: Residential loans: According to Art.13(8)(a), residential loans whose LTV exceeds 75% may be included in the cover pool, as long as the LTV does not exceed 100% and loans with an LTV above 75% do not exceed 25% of the value of the covered bonds secured on the cover pool and the weighted LTV of the cover pool does not exceed 80%.
Commercial loans: According to Art.13(8)(b), commercial loans whose LTV exceeds 60% may be included in the cover pool, as long as the LTV does not exceed 80% and loans with an LTV above 60% do not exceed 25% of the value of the covered bonds secured on the cover pool and the weighted LTV of the cover pool does not exceed 65%.
Shipping loans: According to Art.15(8), shipping loans whose LTV exceeds 60% may be included in the cover pool, as long as the LTV does not exceed 70% and loans with an LTV above 60% do not exceed 25% of the value of the covered bonds secured on the cover pool and the weighted LTV of the cover pool does not exceed 65%.
- for a residential loan with an LTV of 90%, bondholders get the benefit of the portion of the loan between 75% and 90% LTV.
- for a residential loan with an LTV of 105%, bondholders don’t get any benefit, as the entire loan is ineligible.
Comments: If a loan exceeds the LTV caps (i.e. the ones provided in question IV.4a), it is not required to be removed from the cover pool; however, such loan would not count for the purposes of the statutory tests calculation.
Comments: Residential loans: 80% / Commercial loans: 65% / Shipping loans: 65%.
Comments: According to the provisions of Art.32 of the Directive.
Comments: According to Art.31(4) of the Directive, the Issuer must verify the adequacy of the cover pool at least on a monthly basis and submit to the Central Bank of Cyprus the form attached to the Directive as Appendix 3 on a quarterly basis.
4. Exchange rate shifts determined by a 99%, 6-month confidence interval using daily changes for the last 250 business days.
Comments: According to Art.31(4) of the Directive, the Issuer must verify the adequacy of the cover pool (which includes the stress test claculations) at least on a monthly basis and submit to the Central Bank of Cyprus the form attached to the Directive as Appendix 3 on a quarterly basis.
Comments: Art.27 of the Directive specifies the requirements for the maintenance of liquidity for servicing and repayment of the covered bonds.
Comments: According to Art.27(1) of the Directive, the Issuer is required to reconcile cash inflows and outflows in relation to the covered bonds on a daily basis for the following 180 days period and to cover the highest net cash outflow that arises with complementary assets.
(b) 30 days to the repayment date, 100% of the amount due.
The liquidity may take the form of either complementary assets within the pool or liquid assets (as defined in the Directive) outside the pool.
(1) it shall take all necessary measures to rectify the breach within a period that the competent authority may, either determine in terms of a Directive, or, in exceptional and urgent cases, set with a decision, which the competent authority communicates to the Issuer.
(2) the Issuer shall not issue covered bonds until the necessary rectification measures are taken, without prejudice to the power of the competent authority to appoint a covered bond business administrator under Art.59(2)(j) of the Law.
Comments: According to the provisions of Art.46(d) of the Directive, the Central Bank of Cyprus determines a duty of monitoring the cover assets by the Covered Bond Monitor, including the examination of compliance, on an on-going basis, with the cover pool adequacy criteria set in terms of Art.23 of the Directive.
Comments: According to Art.31(4) of the Directive, the Issuer must verify the adequacy of the cover pool (which includes tests on market and liquidity risk) at least on a monthly basis and submit to the Central Bank of Cyprus the form attached to the Directive as Appendix 3 on a quarterly basis.
Comments: According to Art.25 of the Directive, the Issuer is required to enhance the cover pool with complementary assets, the value of which, after possible application of set-off, covers by 5% the outstanding amount of the covered bonds.
Comments: According to the provisions of Art.19(1) of the Directive, cover assets in excess of those required for complying with the basic or the supervisory overcollateralisation (i.e. the mandatory overcollateralisation) shall be counted in the the calculation of any contractual overcollateralisation only if their counting is necessary for the issuer’s compliance with the contractual overcollateralisation.
Such contractual overcollateralisation is recorded in the covered bonds register (according to the provisions of Art.7 of the Directive) and is protected.
Comments: According to Art.5 of the Law, the Central Bank of Cyprus establishes and maintains a register of approved institutions. Art.6 of the Law, determines that only credit institutions established in the Republic of Cyprus and are supervised by the Central Bank of Cyprus may apply for registration as an approved institution.
- the total amount of the complementary assets counted in the basic cover and their percentage to the total value of the basic cover.
- perform any other duties that the Central Bank of Cyprus requires.
- performs cover pool adequacy assessment (in accordance with Art.18(6) of the Law) using solely those cover assets which are counted for the purposes of such assessment.
Art.40 of the Law outlines the effect of dissolution proceedings on covered bonds business and the role of the covered bonds business administrator.
Comments: According to the provisions of Part VIII of the Law and Part V of the Directive.
Comments: Art.39 of the Law states that "the obligations of an institution with covered bond obligations towards the cover pool creditors continue to be in effect and are enforceable as provided for in this Part irrespective of the fact that the credit institution is subject to dissolution proceedings".
In addition Art.40(1) of the Law states that where an institution with covered bond obligations is subject to dissolution proceedings, all covered bonds issued by the credit institution remain in force, subject to the terms and conditions under which they have been issued.
Following dissolution proceedings being commenced in respect of the Issuer, the covered bond business administrator will be responsible for managing the cover pool in accordance with Part IX of the Law.
where he reasonably considers that following a potential initiation of dissolution proceedings the cover pool will not be adequate to fully cover the claims of the cover pool creditors.
Comments: According to the Law, "cover pool" means the sum of assets and hedging contracts that secure, under Part III of the Law, covered bonds, subject to Art.40 of the Law.
Comments: In accordance with Art.40 of the Law ("Effect of dissolution proceedings in covered bonds business").
Comments: According to the provisions of Art.43(5) of the Law, in case where the claims of the cover pool creditors are not satisfied in full from the proceeds of the sale or other form of disposal of the cover pool, those creditors are, with respect to the unsatisfied part of their claims, unsecured creditors of the institution with covered bond obligations that is subject to dissolution proceedings.
Comments: According to Art.38(c) of the Law, if the Issuer is subject to dissolution proceedings, these do not affect the rights of a counterparty under a hedging contract which is included in the cover pool.
In accordance with Art.39(1), despite the dissolution, the obligations of the Issuer to covered bond creditors continue to be in effect and are enforceable.

References: Art.43
 Art.23
 Art.45
 Art.14
 Art.14
 Art.13
 Art.31
 Art.13
 Art.13
 Art.13
 Art.15
 Art.32
 Art.31
 Art.31
 Art.27
 Art.27
 Art.59
 Art.46
 Art.23
 Art.31
 Art.25
 Art.19
 Art.7
 Art.5
 Art.6
 Art.18

Art.40
 Art.39
 Art.40
 Art.40
 Art.40
 Art.43
 Art.38
 Art.39