Mortgage lenders from across Europe are teaming up to launch next week a trade group aiming to develop and promote standards in the growing covered bond market. The European Covered Bond Council plans to hold its first meeting early next year and will discuss issues including standardization of what exactly it means to sell a covered bond.
The council also plans to act as a consolidated lobbyist to urge European central banks to pass legislation permitting the sale of covered bonds across the Continent, according to Louis Hagen, executive director of the Association of German Mortgage Banks, which is a founding member of the trade group. For example, he noted there is no specific legal basis for U.K. lenders to sell covered bonds, although building societies have sold variations of the same theme but under the covered bond banner. As a result, the trade group will push to establish a minimum criteria defining what is and what is not considered a covered bond, he said.
The group is being formed now because of the growth of the covered bond market in recent years and as a mechanism to advocate the attractiveness of the asset class, Hagen said.
