Armenian Covered Bonds - Armenia

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1 Who is the issuer? Universal credit institution

Banks and credit organizations
2 Does the bondholder have recourse to the issuer (in case of special issuer: recourse to the sponsor bank)? Direct
3 Who owns the cover assets? The issuer directly
4 Is the issuer the originator of the cover assets? Yes, partly (external origination possible)

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
Exposures to credit institutions x
Residential mortgage loans x x
Commercial mortgage loans x x
Derivatives x
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
3 Is there a maximum level for substitute assets in the statutory national framework? Yes, please specifiy

10%
4 Are there any reporting requirements for covered bond issuers to investors? Yes, by law
5 What is the frequency of reporting to investors? Monthly

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
3 What are the LTV limits (single asset based)? Please specify in %/n.a. Residential
Commercial

70% LTV. If LTV exceeds 85%, then the issuer shall post additional collateral whose cash flows accrue to bondholders only if the issuer defaults.
4 Are loans in excess of LTV limits eligible for inclusion in the cover pool? No (hard limit)

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?
2 Are there mitigating provisions for interest rate risk? Yes, by legislation/regulation

Stress testing requirements are defined in the Central bank Bylaw
3 Are there mitigating provisions for foreign exchange risk? Yes, by legislation/regulation

A pool shall consist of assets denominated in a single currency.
4 Are there mitigating provisions for maturity mismatch risk? Yes, by legislation/regulation
5 What type of coverage test is applied? Nominal cover; Present value cover; Other (Cash flow matching requirements)
6 Are there stress scenarios applied? Yes, other

Central bank regulation

IV.3 Liquidity risk

1 Is exposure to liquidity risk mitigated? Yes, by law
2 What liquidity risk mitigation requirements are in place (principal)? Matching requirements

90 days liquidity provision applies to the combined amount of interest and priciple payments
3 What liquidity risk mitigation requirements are in place (interest)? Matching requirements

90 days liquidity provision applies to the combined amount of interest and priciple payments
4 What is the consequence of not fixing a breach of liquidity risk mitigants? Administrative penalty
5 If 180 days liquidity provisions are in place, what types of liquid assets are eligible
6 If 180 days liquidity provisions are in place, the calculation of principal is based on: The (extended) legal final maturity date

IV.4. Maturity extension

1 Is maturity extension allowed by national law? Yes but optional

The Administrator may stop paying up to 3 months after the event of insolvency
2 Is it possible to issue… Hard bullet
3 Which trigger plays a role for maturity extension according to law - independent or alone or in combination? Issuer bankruptcy/resolution
4 Does any competent authority need to give its okay (or non-opposition)? Yes

For prolongation of further 3 months there is requirement of Central Bank approval

IV.5 Overcollateralisation

1 Is mandatory overcollateralisation required in the law ?
1% NPV under stress scenarios defined by the Central bank bylaw

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
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?

Central bank of Armenia - Website

2 Is a special permission required for a covered bond programme according to national law? No
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])? Yes
5 Which is the typical frequency in the national statutory law of reporting from the covered bond issuers to the designated competent authorities? Monthly

1 Does the national statutory law meet the requirements laid down in the EU Covered Bond Directive? No

No assesssment has been carried out
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. No
3 Does the statutory law allow covered bonds out of the scope of Art 129 of CRR? In this case, please specify the collateral No
4 Are listed covered bonds eligible in repo transactions with the national central bank? Yes

Primary Legislation

Secondary Legislation

Fact Book

Any further comments/information?