Discussions on legal issues and challenges of covered bond legislation

Berlin, 10 October 2023

Impressions from the 25th Central European Covered Bond Conference in Graz, Austria

On 5 and 6 October 2023 vdp performed the 25th Central European Covered Bond Conference in Raaba-Grambach (near Graz, Austria) in cooperation with Raiffeisen-Landesbank Steiermark. Divided into four panels of 90 minutes each, the event allowed to explain and discuss in detail basic legal issues regarding covered bond (CB) legislation and supervision of CB issuers. Charts showing the legal situation across Europe from both vdp projects on comparison of law regarding security rights over immovable property and Covered Bond Legislation illustrated the pittoreske picture of both fundamental issues and legal details in Europe.

After having worked on the „must-issue“ Covered Bond-Directive (CBD) and interpretation needs in Panel 1, moderated by Jochen Deiss (Treasurer at Raiffeisen-Landesbank Steiermark), three new issues were discussed: Panel 2, moderated by Andras Botos (Head of Law at Hungarian development bank MFB), focused on the way in what legal form CB „law“ develops, and what it means legally that supervision authorities more and more create so-called „soft-law“, what can be debated as being never soft.

Sascha Kullig (Member of the vdp Executive Board) moderated Panel 3 on Green CBs, however with the focus on How to ensure green cover assets? Here, it was shown that a lot of mortgage loan originators (and CB issuers) still struggle to find the right clauses in mortgage loan contracts to create green mortgages and to keep them green. Inexisting data about buildings and data protection rules make it difficult to foresee future legal developments during the lifetime of a long-term mortgage loan.

The item of panel 4, moderated by Andreas Luckow (Deputy Head of Cover Assets at vdp), was touched first time in a CB conference: Building insurance and cover pool. General banking law and CBD expect that buildings are insured against all relevant risks. However, what is relevant and to what extend? And how to ensure that any claim out of any damage would not reduce the security, which is provided by the building as part of the pledged land? Here, the charts of the presentation showed clearly that there a different approaches across Europe to answer this question.

Dr. Otmar Stöcker (Managing Director at vdp) drew a positive conclusion after the close of the event "The aim of the conference series, to provide all participants with valuable content, was once again achieved."