This is an archived release.
Sharp decrease in banks’ stock of treasury bills
So far in 2011, Norwegian banks have reduced their stock of treasury bills by close to NOK 57 billion, or 42 per cent. The sharp decrease is most likely linked to the phasing out of the “swap agreement” that was introduced during the financial crisis.
At the end of May 2011, Norwegian banks’ stock of treasury bills was close to NOK 80 billion. This is the lowest amount since April 2009, and almost half of what it was one year ago. So far in 2011, banks have reduced their stock of treasury bills by close to NOK 57 billion, or 42 per cent, and in the last month alone the stock was reduced by NOK 14 billion, or almost 15 per cent.
Decrease is most likely linked to the “swap agreement”
On 24 October 2008, the Norwegian Parliament authorised the Ministry of Finance to put into effect an arrangement where Norwegian banks could “swap” covered bonds with treasury bills. The “swap agreement” was an effort to reduce the negative effects of the financial crisis. The last “swap agreements” were concluded towards the end of 2009. Many of the “swap agreements” expire in 2011, and in addition the government, through the Ministry of Finance, has made an offer of early expiration.
Norwegian banks’ debt to the government is so far reduced by almost NOK 20 billion in 2011, or close to 11 per cent. However, at the end of May 2011 the debt still amounted to around NOK 162 billion.
Covered bonds still an important source of funding for Norwegian banks
At the end of May 2011, Norwegian banks had a stock of covered bonds amounting to NOK 229 billion. A total of 95 per cent of these were issued by Norwegian mortgage companies, and out of these close to 87 per cent were issued by associated mortgage companies or mortgage companies where the bank has full ownership.
Norwegian mortgage companies had issued covered bonds amounting to NOK 610 billion at the end of May 2011. Of this, NOK 355 billion was issued in Norway, while the remaining NOK 255 billion was issued abroad. In the last month, Norwegian mortgage companies increased their issues of covered bonds in Norway by 4.5 per cent. This is the highest monthly growth since September 2009. Issues abroad on the other hand decreased by 1.7 per cent the last month.
Because the banks are free to resell the treasury bills they have acquired through the “swap agreement” with the government, the changes in the stock of treasury bills do not fully reflect the total amounts involved in the “swap agreement”.
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. Only mortgage companies with special authorisation are allowed to issue covered bonds in Norway.
The statistics is now published as Banks and mortgage companies.