Regulation

Denmark introduced the first covered bond legislation in the mid-19th century. Mortgage banks are highly regulated credit institutions and are required to fund all mortgage lending by issuance of covered bonds.

The purpose of EU and Danish covered bond legislation is to ensure that covered bonds are bonds with low risk for investors. 

Nykredit covered bonds comply with UCITS regulation for covered bonds.

The majority of covered bonds issued by Nykredit after 1 January 2008 also comply with the covered bond criterias of the CRD/CRR.

Danish legislation was last amended in the summer of 2007, in part to ensure the continuous eligibility of Danish mortgage bonds as covered bonds under the stricter CRD definition.

Nykredit's business model dictates a strong capital structure to support competitive credit ratings and ensure business continuity regardless of considerable fluctuations in economic activity.

Nykredit Group includes two separate mortgage banks that are both licensed to issue covered bonds. In order to facilitate a more efficient funding of the Group’s mortgage lending the Group is employing a joint funding model under which mortgage loans from Totalkredit are funded by issuance of covered bonds from the parent company Nykredit Realkredit.

The joint funding model is approved by the Danish FSA.

As part of the implementation of the Bank Recovery and Resolution Directive (BRRD), Denmark has introduced a minimum requirement for own funds and eligible liabilities (MREL).

Read the Danish Financial Supervisory Authority’s inspection reports for the Nykredit Group here:

The reports are only available in Danish.