Government financial package - swap scheme for covered bonds
As part of its package to mitigate the adverse impact of the financial crisis, the Ministry of Finance on behalf of the central government has put in place a scheme that enables banks eligible for Norges Bank's fixed-rate lending facility (F-loans) to swap covered bonds for government securities.
Together with other banks in SpareBank 1 Alliance, SpareBank 1 SR-Bank founded the mortgage lender SpareBank 1 Boligkreditt. Since 2007 SpareBank1 Boligkreditt has issued covered bonds in the amount of nearly NOK 35 billion.
As the package has now been assembled, it is not a pure swap scheme, but a scheme in which the banks pledge covered bonds as collateral in exchange for government bonds. Taking advantage of the scheme may conflict with some of the bank's existing funding agreements, which contain negative pledge provisions.
At the request of Norges Bank, the Ministry of Finance is planning certain changes in the scheme for swapping covered bonds for government securities. After the rule change, the banks will also be able participate through their mortgage companies in that bank-owned mortgage lenders authorised to issue covered bonds may participate in the swap scheme. This change is discussed in the proposition to the Storting being presented today concerning the rebalancing of the fiscal budget for 2008.
It is SpareBank 1 SR-Bank's view that the rule change will enable the bank to swap covered bonds for government securities through the mortgage lender SpareBank 1 Boligkreditt.
Although SpareBank 1 SR-Bank's liquidity situation is satisfactory, it will continually assess the need to avail itself of the scheme.
Contact persons:
Investor Relations Manager Kyrre M. Knudsen, mobile: +47 938 83 518
CFO Lisbet K. Nærø, mobile: +47 952 65 960