The European Covered Bond Council (ECBC) stated that it welcomed yesterday’s announcement by an investment banking group that these institutions are committed to helping ensure the successful launch of the ECBC Covered Bond Label.
The banks said they will allow issuers to set-off the label's cost against the fees that they pay to the lead managers.
The investment banks issued a joint statement saying that they believe that it is a positive step in fostering the development of the covered bond market. They also noted the comments by the European Central Bank representatives supporting the label at the recent ECBC Plenary meeting held in London.
The banks proposed that the cost of the label should be set against fees paid to them. For the first benchmark covered bond issued under the label by each an issuer, the institutions suggested that the total underwriting fee paid be reduced by the cost which that issuer has had to pay to obtain the label both in terms of the initial registration fee and if applicable, any volume related fee.
They said that the amount deducted will be taken from the individual fees that is payable to each investment bank pro rata among investment banks that are part of this initiative.
“The announcement of the active support for the Covered Bond Label by of one of the Industry’s leading stakeholder groups is a very positive development and serves to demonstrate the confidence and commitment that the Industry has to make the new Label a success,” said Luca Bertalot, head of the ECBC.
The label highlights to buyers covered bonds' value and quality. It also further enhances the recognition of and trust in the sector, the Council said in a press release.
For further information on the initiative, please click this link.