Alfred Sant calls for a balanced approach to a European directive on covered bonds

The European Parliament approved a Resolution on Covered Bonds amended by Alfred Sant, S&D Shadow Rapporteur in preparation for the European Commission’s legislative measure on this matter which is expected to be published during the first quarter of 2018. Dr Sant called for a balanced approach to a European Directive on Covered Bonds and said that the Directive should respect the achievements of national markets. Covered Bonds are loans schemes issued by the private sector based on contracts on property sales and loans by government. Covered Bonds are not used as yet in Malta but are gaining popularity across Europe, while they have been widely adopted with success for the past two centuries in countries like Germany and Denmark. At European level, there isn’t a legislative framework for Covered Bonds and they are mainly regulated at national level.

The Maltese MEP had insisted at ECON (European Parliament’s Committee on Economic and Monetary Affairs) that any future initiative by the European Commission on Covered Bonds should provide a balanced solution towards minimum harmonisation of national frameworks at EU level, building on existing well-functioning national Covered bonds markets and maintaining an appropriate level of flexibility in order to avoid disruption of existing Covered Bonds national markets. The Maltese MEP had disagreed with the Rapporteur in the amendment phase of the draft report on a number of matters including the maturity extension of the Covered Bonds, opting for a more flexible approach.

“As Shadow Rapporteur on this file, I have voted in favour on the following understanding: First, in the moves towards a Capital Markets Union (CMU), it would be inconceivable not to allow space for covered bonds. The CMU does not have to be entirely seamless, nor does it have to apply on one-size-fits-all basis; but it cannot have significant gaps in its structure, which would be the case if covered bonds were not included in its purview. Secondly, such Directive would establish a clear definition that preserves the covered bond brand identity throughout a principle-based approach; does not force too many details that would apply across different national markets and takes due recognition of long-standing national systems that have been working well until now, without disrupting them. Thirdly, a Directive would benefit Member states that do not have such market yet or where it is still underdeveloped.” remarked the Maltese MEP.

Dr Sant told the European Parliament that Covered bonds have already proved themselves over centuries in some European markets. They have provided robust and flexible methods for raising finance, benefitting both issuers and investors in a reasonably transparent framework. In the run-up to the Commission’s proposal for a Directive, the European Parliament has approved a comprehensive and well-balanced resolution.

The resolution was approved with 543 votes in favour, 99 against and 56 abstentions.

Maltese Version – EMENDI TA’ ALFRED SANT FAVUR BILANĊ FID-DIRETTIVA EWROPEA GĦAL ‘COVERED BONDS’ APPROVATI FIL-PARLAMENT EWROPEW

Il-Parlament Ewropew approva riżoluzzjoni emendata minn Alfred Sant, Shadow Rapporteur f’isem S&D fuq ‘Covered Bonds’ li tressqet bħala preparazzjoni għall-miżura leġiżlattiva tal-Kummissjoni Ewropea li mistennija tkun ippubblikata fl-ewwel kwart tal-2018. Dr Sant sejjaħ għal bilanċ fid-Direttiva Ewropea tal-‘Covered Bonds’ u saħaq li din għandha tirrispetta l-kisbiet tas-swieq nazzjonali. ‘Covered Bonds’ huma ċedoli ta’ self maħruġa mis-settur privat ibbażati l-aktar fuq ġabra ta’ kuntratti ta’ xiri ta’ propjetà bin-nifs u ċedoli ta’ self mill-gvernijiet. Il-“Covered Bonds” għadhom ma jintużawx f’Malta imma qed jinfirxu mal-Ewropa, waqt li f’pajjiżi bħall-Ġermanja u d-Danimarka ilhom jintużaw għall-aħħar żewġ sekli b’suċċess kbir. Fuq livell Ewropew, ma hemmx qafas legali għal ‘Covered Bonds’ u huma ħafna drabi regolati fuq livell nazzjonali.

Fl-emendi għar-rapport li kien ġie approvat fl-ECON (Kumitat Ekonomiku u Monetarju tal-Parlament Ewropew) il-MPE Malti kien insista li kull inizjattiva li tittieħed fil-futur mill-Kummissjoni Ewropea fuq il-‘Covered Bonds’ għandha tipprovdi soluzzjoni bilanċjata u armonizzazzjoni minima tal-qafas nazzjonali f’livell Ewropew. Din għandha tkun mibnija fuq s-swieq nazzjonali tal-‘Covered Bonds’ li jaħdmu tajjeb u li jżommu livell tajjeb ta’ flessibilita` biex ikun evitat it-tfixkil lejn il-‘Covered Bonds’ li diġa` jeżistu fis-swieq nazzjonali. Dr Sant ma qabilx mal-ewwel abbozz tar-rapport imressaq mir-Rapporteur fuq numru ta’ kwistjonijiet li jinkludu l-estensjoni tal-maturita` tal-‘Covered Bonds’. Dr Sant kien favur metodu aktar flessibbli u dawn l-emendi ġew aċċettati u inklużi fir-Rapport li tressaq għall-approvazzjoni tal-Parlament Ewropew.

“Bħala Shadow Rapporteur fuq dan ir-rapport, ivvotajt favur fuq dawn il-fehimiet: L-ewwel nett, fil-pass lejn il-Capital Markets Union (CMU) kien ikun inkonċepibbli li ma jingħatax spazju lil ‘Covered Bonds’. L-Unjoni tas-Swieq Kapitali mhux bilfors trid tkun applikata fuq bażi ta’ one-size-fits-all; imma ma jistax ikollha ħafna xquq fl-istruttura tagħha, u dan ikun il-każ jekk il-‘Covered Bonds’ ma jkunux inklużi fl-operazzjonijiet tagħha.
It-tieni punt, Direttiva ta’ dan it-tip tistabilixxi definizzjoni ċara li tħares l-identita` tal-‘Covered Bonds’; ma jisfurzax wisq dettalji li jkunu applikati tul swieq nazzjonali differenti u jirrikonoxxi s-sistemi nazzjonali li ilhom imwaqqfa għal ħafna żmien u li ilhom jaħdmu tajjeb sa issa, mingħajr ma jfixkilhom.

It-tielet punt, Direttiva hija ta’ benefiċċju għall-istati membri li għad ma għandhomx suq bħal dan jew li għadu mhux żviluppat sew.” qal Dr Sant lill-Parlament Ewropew.

Dr Sant qal li l-‘Covered Bonds’ diġa` urew il-validita` tagħhom tul mijiet ta’ snin fis-swieq Ewropej. Ipprovdew metodi b’saħħithom u flessibbli biex isibu l-kapital, ta’ benefiċċju għax joffru qafas trasparenti kemm għal dawk li joħorġuhom u kemm għall-investituri. Fil-mixja lejn il-proposti tal-Kummissjoni dwar id-Direttiva, il-Parlament Ewropew approva riżoluzzjoni wiesa’ u bilanċjata tajjeb, qal Dr Sant.

Ir-riżoluzzjoni kienet approvata b’543 voti favur, 99 kontra u 56 astenzjoni.