As part of the community of multinational financial
institutions, major commercial and mortgage banks in certain
parts of central and eastern Europe (the CEE) such as Bulgaria,
the Czech Republic, Poland and Romania aim to expand their
market positions and improve their return-on-equity ratios.
This is a market in which on the one hand, no balance-sheet
effect inherent to true-sale securitisation is desired. On the
other hand, cheap funding is needed. It requires an
unconventional view on what banks are looking for.
These banks benefit from existing modern covered bonds
legislation. They frequently use it for acquiring cheap and
short-term funding through the local capital markets. Many
banks are either moving towards Basel II (for example, the
Czech Republic) or already applying it (Bulgaria, Romania,
Poland). They are seeking capital relief for regulatory
purposes. Because this does not affect the figures of their
final balance sheets, it answers their need...