Covered bonds increase sharply
Banking and financial markets
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Financial corporations, balance sheetJune 2009

As from 2016 the statistics is published with Banks and mortgage companies.



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Covered bonds increase sharply

The Norwegian banks’ stock of Norwegian treasury bills has increased sharply. By end-June it was more than four times as high as by end-December 2008. This is a consequence of the offer made by the Norwegian government to exchange treasury bills with covered bonds owned by the banks.

The banks’ stock of Norwegian treasury bonds increased by 22.5 per cent during June and amounted to NOK 108 billion by the end of the month. The Norwegian banks’ stock of covered bonds amounted to NOK 146 billion at end-June. This is an increase of more than 200 per cent since the beginning of this year.

Sharp increase in Norwegian mortgage companies’ emissions of covered bonds

Norwegian mortgage companies had issued covered bonds amounting to NOK 302 billion at end-June. From the beginning of this year to end-June the debt caused by covered bonds increased by 55 per cent. The monthly growth rate was in June 13.2 per cent. This is the largest monthly growth rate since the registration of the emissions of covered bonds from Norwegian mortgage companies started in December 2008.

The sharp increase in the Norwegian banks’ stock of treasury bills and the mortgage companies’ emissions of covered bonds are related to the “swap agreement” between the Norwegian government and the banks.

Banks’ stock of treasury bills and covered bonds. NOK million

The Norwegian governments’ first offer for the financial sector

24t h of October 2008, the Norwegian Parliament gave the Ministry of Finance authority to put into effect an arrangement where Norwegian banks could “swap” covered bonds with treasury bills. This “swap agreement” was an effort to reduce the negative effects of the financial crisis. The banks can acquire covered bonds either in the market or directly from mortgage companies that are licensed to issue covered bonds. After the announcement of this offer from the Norwegian government a number of new mortgage companies have been established. As a result, lending portfolios have been swapped between banks and mortgage companies.

Treasury bills and covered bonds. December 2008-June 2009. NOK million and monthly growth (The figures are corrected 13 August 2009)
 Mortgage companys'
emission of
covered bonds
Monthly growth.
Per cent
Banks' stock
of covered bonds
Monthly growth.
Per cent
Banks' stock
of treasury bills
Monthly growth.
Per cent
December 2008 195 014-46 165-26 293 300.3
January 2009 213 9439,777 07667.052 46199.5
February 2009 227 2086.289 37916.049 533-5.6
March 2009 249 2399.7 117 50631.552 1535.3
April 2009 250 2040.4 117 5370.067 91730.2
May 2009 266 8696.7 121 2073.188 31230.0
June 2009 302 20513.2 146 42720.8 108 18322.5

The Norwegian governments “swap agreement”, where banks can exchange covered bonds with treasury bills has a ceiling of NOK 350 billion. Because the banks are free to resell the treasury bills they have acquired through this arrangement, the increase in the stock of treasury bills does not fully reflect the total amounts involved in the arrangement.

Covered bonds are bonds conferring a preferential claim over a cover pool consisting of public sector loans and loans secured on residential property and other real property.

1 The figure is corrected 13 August 2009.