Mortgage/Covered bonds

Criteria
1

Dear all, do you know, for an FI, where emissions financed via ownership of mortgage bonds should be included?

4

Thanks for posting.

Per Table 5.2 of the FI Guidance, mortgage-backed securities and covered bonds are currently out of scope.

5

Hi Howard,

If the financial institution has the majority of the investments (ca. 90%) in mortgage bonds, would SBTi be open to discuss an exception to cover such instruments with a target in order to allow the FI to be more ambitious and achieve higher coverage?

For example, the FI could use the TR/PC approach to set targets on mortgage bonds, and then in order to achieve it the FI will need to engage with the financial institutions that issue the mortgage bonds to set targets. Would that be an option?

The FI in question will be submitting targets soon following the NT framework (v 1.1/v 2.0). If such questions have to be addressed through another channel, please let me know.

Thank you,

Valeria

6

Hi Valeria, securitized fixed income is proposed to be optional in certain cases in the pilot test version 2.0 of the Near-Term Criteria and Recommendations for FIs so that a SDA target can be set on the underlying real estate assets. To achieve this, the FI can of course engage with the FIs issuing the bonds to set targets themselves.