Slovak Covered Bonds - Slovakia

1	What type of assets may be included in the cover pool?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Exposures to public sector entities x x Exposures to credit institutions x Residential mortgage loans x Commercial mortgage loans x Exposures to multilateral development banks x Other x x Primary assets category "Others 1" means loans to/guaranteed by public undertakings
2	What is the geographical scope of assets?
	Primary assets Substitution assets Public sector assets Mortgage assets Other 1* Other 2* Other 3*   Domestic x x x x Multilateral development banks x EU x x EEA x UK x CH x Australia x Canada x Japan x New Zealand x USA x OECD x G10 x
3	Is there a maximum level for substitute assets in the statutory national framework?	Yes, please specifiy 10% / 20% of the nominal value of issued covered bonds (depending on type of primary assets)
4	Are there any reporting requirements for covered bond issuers to investors?	Yes, by law and in line with art. 14 of EU Covered Bond Directive
5	What is the frequency of reporting to investors?	Quarterly

1	What is the basis for property valuation	Market value
2	Is a regular update of the property value required?	Yes, new external physical apraisal within a specific time span Yes, automated / indexed valuation sufficient New external physical appraisal is required when changes are made to the subject of the lien
3	What are the LTV limits (single asset based)? Please specify in %/n.a.	Residential Commercial Other assets Residential 80% (CRR compliant assets); Commercial 60% / 70% (if conditions under CRR Art.129 par. 1(f) are met); Other 70% LTV for high quality assets according to Art.6 par.1 b) CBD; 100% LTV only if loan pledged with mortgage real estate in compliance with CRR
4	Are loans in excess of LTV limits eligible for inclusion in the cover pool?	Hard limit upon inclusion but soft limit accepted following inclusion

IV.1 Derivative contracts in the cover pool

1	Are derivative contracts eligible for the inclusion in the cover pool?	Yes, exclusively for hedging purposes (by law)
2	Are there requirements for derivative contracts (e.g. eligibility criteria for hedging counterparties)?	Yes, specified in law
3	Will derivative contracts remain in case of insolvency of the issuer?	Yes
4	If derivatives are permitted in the cover pool, what is their ranking?	Pari passu to covered bond holders

IV.2 Exposure to market risk

1	What is the primary method for the mitigation of market risk?	Use of derivative hedging instruments
2	Are there mitigating provisions for interest rate risk?	Yes, by legislation/regulation
3	Are there mitigating provisions for foreign exchange risk?	Yes, by legislation/regulation
4	Are there mitigating provisions for maturity mismatch risk?	No
5	What type of coverage test is applied?	Other, please specify For further details see comments section at the end of the questionnaire
6	Are there stress scenarios applied?	Yes, by law

IV.3 Liquidity risk

1	Is exposure to liquidity risk mitigated?	Yes, by law
2	What liquidity risk mitigation requirements are in place (principal)?	180 days liquidity provisions Maturity extension provisions Stress testing requirements
3	What liquidity risk mitigation requirements are in place (interest)?	180 days liquidity provisions Stress testing requirements
4	What is the consequence of not fixing a breach of liquidity risk mitigants?	Administrative penalty Other, please specify The measure of last resort is the potential withdrawal of the prior consent of the regulator to issue covered bonds and obligation of the issuing bank to sell/transfer the programme to other bank
5	If 180 days liquidity provisions are in place, what types of liquid assets are eligible	LCR Level 1 LCR Level 2a LCR Level 2b Short term exposures to credit institutions (Credit Quality Step (CQS) 1) Short term exposures to credit institutions (CQS 2) Short term deposits to credit institutions (CQS 1) Short term deposits to credit institutions (CQS 2)
6	If 180 days liquidity provisions are in place, the calculation of principal is based on:	The expected maturity date

IV.4. Maturity extension

1	Is maturity extension allowed by national law?	Yes, but optional and subject to conditions
2	Is it possible to issue…	Soft bullet
3	Which trigger plays a role for maturity extension according to law - independent or alone or in combination?	Issuer bankruptcy/resolution Issuer failure to pay Other Issuer failure to pay - in the event of forced administration imposed on the issuing bank; Other - withdrawal of prior consent for covered bond programme
4	Does any competent authority need to give its okay (or non-opposition)?	Yes

IV.5 Overcollateralisation

1

Is mandatory overcollateralisation required in the law ?

CRR eligible assets min. OC - 5% - nominal CRR non-eligible assets min. OC - 10% - nominal

V.1 Cover pool monitor (CPM)

1	Is there a cover pool monitor in addition to national competent authorities in the statutory law?	Yes, by law and in line with Article 13 of EU Covered Bond Directive
2	Is the CPM separate from the issuing credit institution?	Yes, required by national statutory law
3	Is the appointment, dismissal, eligibility criteria and the role of the CPM regulated by the national statutory law?	Yes

V.2 Banking supervision

1	Which are the national competent authorities designated to carry out covered bonds public supervision in the law?	National bank of Slovakia - Website
2	Is a special permission required for a covered bond programme according to national law?	Others, please specify Prior approval from the National bank for each type of covered bond programme
3	Is there a covered bond issuance limit in law or regulation? If yes, please specify	No
4	Does the national statutory law provide for the appointment of a dedicated cover pool administrator in case of insolvency/resolution (transfer included acc. to BRRD [Bank Recovery and Resolution Directive])?	No
5	Which is the typical frequency in the national statutory law of reporting from the covered bond issuers to the designated competent authorities?	Quarterly

1	Does the national statutory law meet the requirements laid down in the EU Covered Bond Directive?	Yes
2	Does the statutory law meet the requirements of Article 129 of CRR [Capital Requirement Regulation]? In this case, please specify the collateral types meeting the Art. 129 CRR.	Yes CRR Art. 129 par.1) a, d, f for Primary assets; CRR Art. 129 par.1) b, c for Substitution assets
3	Does the statutory law allow covered bonds out of the scope of Art 129 of CRR? In this case, please specify the collateral	Yes Residential or commercial mortgage loans not meeting CRR requirements (e.g. LTV limits), loans to or guaranteed by the public undertakings
4	Are listed covered bonds eligible in repo transactions with the national central bank?	Yes

Primary Legislation

• Act on Banks No. 483-2001 Coll, on Banks, as amended (SK).pdf (Original language)
• Act on Banks No. 483-2001 Coll, on Banks, as amended (EN).pdf (English language)

European Covered Bond Label (Premium) list

• https://nbs.sk/dohlad-nad-financnym-trhom/dohlad/zoznam-krytych-dlhopisov-s-oznacenim-europsky-kryty-dlhopis/ (Original language)

Hypostat

• Slovakia.pdf (English language)

Fact Book

• 3.36 Slovakia.pdf (English language)

Any further comments/information?

Comments on Seciton IV.2.5: Coverage test is based on following formula: A/B, where: A represents the sum of nominal value of primary assets, the lower of nominal/real value of liquid and substitution assets and incoming cash flow from derivatives and B represents the sum of nominal value including accrued interest of issued covered bonds, expected costs associated with administration of covered bond programme and cash outflows from derivatives.