Proposition 53K2342

Projet de loi relatif à des mesures diverses pour faciliter la mobilisation de créances dans le secteur financier.

General information ¶

Submitted by

PS | SP the Di Rupo government

Submission date

July 6, 2012

Official page

Visit

Status

Adopted

Requirement

Simple

Subjects

financial instrument financial institution financial solvency financial legislation guarantee credit guarantee credit institution claim

Voting ¶

Voted to adopt

Groen CD&V Vooruit Ecolo LE PS | SP Open Vld MR

Voted to reject

∉ N-VA LDD VB

Party dissidents ¶

• Peter Luykx (CD&V) voted to reject.

Contact form ¶

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Discussion ¶

July 18, 2012 | Plenary session (Chamber of representatives)

Full source

by Mr. Coëme, rapporteur, returns to the written report.

Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker. Both draft laws were also beautifully included in one green book. I think one wants to make it seem that it is two designs that absolutely belong together, that you want to sell two different products as one. If we look at it thoroughly, I think there is no coherence between the two draft laws.

The draft law on covered bonds is, in our view, the horse that draws the hook, including an improved version of the casino game SPV hidden for the financial sector.

Let us first look at the horse, the first bill. With the issuance of a covered bond, a bank will be able to separate part of its assets into a particular asset. In this separate asset, the bank may accommodate mortgage loans, which it has provided to its clients. It may also be debt claims on or guaranteed by government agencies, or debt claims on other banks.

Institutions that have money, such as insurance companies or pension funds, can then subscribe to such a covered bond. In this way, the issuing bank gets fresh money to re-render loans.

Anyone who subscribes to such covered bonds will be assured that they will only be repaid with the value of the separate credit portfolio. If the proceeds of that separate credit portfolio would not be sufficient, then they, like all the other creditors of a bank, push again to be paid for the remainder with the general capital.

Mr. Minister, the issuance of covered bonds already exists in most countries, as you mentioned in your explanation, but with the introduction of Belgian covered bonds, Belgian banks will now also become cheaper at money in the same way.

Do not misunderstand us, Mr. Minister, the N-VA agrees that the Belgian banks can finance themselves cheaper with covered bonds. However, it is essential that the loans that the bank has granted remain with that bank.

Then, of course, the bank continues to bear the risk that its client will not repay the loan. As you can see, we voted against. There are three reasons for this.

The first reason for this is, as I just mentioned, that banks may first transfer the loans or credits to another bank, which then in turn issues that covered bond. In the explanation, it would be another credit institution within the same group. During the discussion in the committee, the representative of the National Bank of Belgium also favoured this. However, in the committee we also noted that none of the law itself provides that that credit portfolio must be transferred to a credit institution within the same group. Moreover, it must also be my heart that we must have learned a lesson in the special committee that examined the financial and banking crisis in the previous legislature. I quote again from the report of that banking committee: “If a lender knows that the credit granted by him will in the future be sold to a third party, then the temptation arises to take less closer to the standards of lending. After all, the lender knows that the ultimate risk will not be for him. For example, it is possible that he is granting loans to less solvent parties or that the loan granted is too high compared to the value of the collateral.”The people who sat in this committee and the experts who accompanied the committee then all agreed with that report. From the point of view of consumer protection, it is therefore advisable that the bank that grants the credit continues to bear the risk even if its client does not repay the credit. Transfer of credit to another institution is therefore not recommended.

Mr. Minister, the second reason why we did not support this bill is the way in which current creditors see the introduction of covered bonds decrease their collateral on the bank. Article 8 of the draft law stipulates that the bank, which is still the debtor, may determine that the disposed assets also may still be part of the collateral of current creditors.

Such a provision is to put the world on its head. In fact, it is normally the creditor who gives his consent to another debtor or, as in company law, that in the event of a split the creditor can demand a security. In this bill, the creditors of a bank do not have that possibility right now. The bank can collect the collateral of current creditors by issuing a covered bond.

A last reason why we cannot agree with the first draft law on covered bonds is related to the entirely irrelevant Article 4. This article provides that even if a bank deceives its creditors, the creditors can no longer claim the nullity of a merger or the rejection of a part of the bank. In our view, this article violates the general legal principle fraus omnia corrumpit, or, in other words, “fraud destroys everything”.

It was not a single draft law, but two draft laws linked together.

What lies under the so-called hook of the car of the second bill? Below it lies an improved version of the casino game SPV hidden. The introduction of a covered bond should cover that in our opinion.

The second bill therefore bears the beautiful name “mobilization of debt claims in the financial sector”. It removes the still existing thresholds for data transfer.

We feel that with the second bill there will be an effectization and that through CDOs the Belgian system banks will come into trouble.

I have a few questions about the second bill. The debts can simply be transferred to another institution. Thus, the banking institution concerned can, in turn, repackage the debt that it has received from one bank as collateral.

In our opinion, the second bill creates an opening in the system, opening a gateway to effectization.

Every bank has a number of lawyers. Even if one leaves a door open in the legislation, there is the danger that they will tighten the legislation. The result may be that this is being exploited. In this way, we can talk about an effect. You continue to argue that it has nothing to do with that. You constantly say that covered bonds are not effecting. It is true, we have not claimed that either. However, from the moment when one transfers debts from the bank to another institution and which in turn can do other things with it, one can of course create this. One option is to transfer the debt claims to a collective investment company for debt claims. In the report on the banking crisis, this is cited very specifically as an effecting vehicle. In this case, we therefore allow the debt claims to be transferred to an effecting vehicle. I ask myself, then, whether this does not leave that little opening in order, in our opinion, to misuse this second bill in these.

Mr. Minister of Finance, as regards the present draft laws concerning the covered or secured bonds, in beautiful Dutch the covered bonds, I must honestly say that I know how to appreciate the technical knowledge of the N-VA colleague.

Mr. Speaker, Mr. Minister, I must also say that the way in which we have to deal with this dossier just before the parliamentary cessation, on a drafte, for such an important topic, still requires a commentary: it is not about a strawbery here today!

On behalf of my group, I would like to see both projects in a slightly wider framework. Let’s call a cat a cat. We are still full of a financial crisis, especially in the south of Europe, which the European Union does not manage. The banking crisis is also not under control, not to mention the real estate soap bubble.

Nevertheless, the banks always know how to do the necessary lobbying work to get something arranged by the governments. The instrument of covered or secured bonds is once again such an additional monetary channel for banks. It is actually a debt instrument. Especially for mortgage banks, so-called covered bonds are an important financial instrument. In short, covered or secured bonds are bonds issued by banks on the capital market that are insured; they are mortgage debt claims by banks on their clients.

In 2010, €2,500 billion were spent on the market of covered or secured bonds in the euro area. In 2010, the financial sector circulated around 349 billion euros in covered or secured bonds, almost as much as the Belgian government debt and almost as much as the Belgian gross domestic product.

In itself, there is nothing against banks looking for additional money channels, but we must pay attention to what we do. I always hold my heart when the banking sector itself says it is a “safe” investment instrument. In the meantime we know better. A nice marketing story is still used by ordinary people as a sweet cake. But now I dare to doubt that.

I refer to the hearings in the special committee Dexia. We learn that the Dexia story to what bonds can all lead to. The banking sector has one major advantage in investing in so-called covered bonds, namely that banks must hold less capital for investments in covered or secured bonds than would be the case for investments in regular bonds.

From the Fortisdebacle and Dexiadebacle we have learned that we should be careful when banks get such an instrument in their hands. Indeed, within the shortest time they create structured covered bonds, which then acquire the characteristics of covered or secured bonds. Then the banks transfer those covered or secured bonds to so-called Special Purpose Vehicles (SPVs) and we have left again for a next banking adventure.

We can talk about covered or secured bonds here, the ultimate question is: what if it ends wrong, colleagues? I would only remind you that many parties in this Chamber agreed to divide the banks into deposit and commercial banks. This was not only a conclusion of the special committee examining the banking crisis, but also of the special committee Dexia.

I note that nothing has yet come into account, but the story of the covered or secured bonds must also be considered in this context.

If the error goes wrong, a depositor or ordinary saver is covered by the government, which is the community, which is the taxpayer, up to 100 000 euros per account. This system of covered or secured bonds goes even further. If the error goes wrong, the bondholder will be compensated for 100% of the principal amount and the interest obtained, regardless of the amount. Who will pay for that, colleagues? The community, the taxpayer. Again, this government is shooting the banking sector to help. Again, there is a possibility that the banks will throw themselves fully on the covered or guaranteed bonds. They smell money from the savers to play with. Again, there is a chance that the financial soap bubble will be blown up, with all the uncertainties of it.

Either covered bonds are a safe airport, or we should place them in the category of risky assets that also fall in times of stress on the financial markets. A historical analysis suggests the first but there are reasons to assume that it can turn quickly. Despite the apparently tough guarantee arrangements, covered bonds are now vulnerable to country risks and the housing market. The risks of Irish and Spanish covered bonds have increased sharply since the credit crisis. This indicates to the market that the insured security and the legal framework in this regard may sometimes be inadequate in a rapidly deteriorating economic climate. This reflects the rising risks of covered bonds, despite the seemingly extensive safeguards. This category has an ambiguous character.

At first glance, covered or secured bonds are a solid investment, but under the surface are mostly muddy traps. The Flemish Importance is very cautious about this. Therefore, we will not approve both draft laws.

I would like to thank my colleagues for their work in the committee. I acknowledge and respect that the Parliament has worked very quickly and not on a slump, as some colleagues summarize.

All countries in Europe had legislation on covered bonds except Belgium. With the efforts of the Chamber, we can correct this. In the committee, we listened extensively to the concerns and explained why we responded positively to them.

I would like to emphasize that the ECB gave a positive opinion on both draft laws. I quote from her letter.

“The ECB welcomes the proposals, as they allow credit institutions to issue covered bonds that are attractive to a wide range of investors and enhance their capabilities to use credit claims as collateral, thereby enabling credit institutions to strengthen their refinancing capabilities.”

With great respect for all considerations regarding certain risks in some statements, there is one thing that is still worth emphasizing. Ensuring that our Belgian financial institutions also have access to these financing opportunities, on equally favourable terms as their competitors in the rest of Europe, is of nature to help ensure the stability and sustainability of our Belgian institutions. In other words, it does not increase the risk for the government or the depositors, but makes it possible for us to have a healthier financial sector in Belgium.