European DataWarehouse (EDW) and Prometeia launched a joint initiative to develop an innovative service to support Covered Bonds tests, which leverages EDW’s repository services and Prometeia’s technology and know-how for financial risk management.
The service is designed to respond to the compliance needs that issuers face when structuring Covered Bonds programs. According to the EU Regulatory Framework, the Calculation Agent, on the basis of the information provided in the transaction documents, shall verify compliance with the Mandatory Tests, thereby granting the coverage principle of the covered bonds, on each calculation date and on any other date on which the verification of the Mandatory Tests is required.
In addition, rating agencies require additional tests, such as the Asset Coverage Test and the Amortization Test, which should be performed periodically or after particular events. These tests aim to fulfill the requirement of over-collateralization, i.e. the buffer used to address the risks embedded in the covered bonds including liquidity and market risk, asset deterioration risk and other risks related to the operational infrastructure of the covered bond program.
EDW liaises with financial institutions across Europe and provides repository services for documentation and reporting requirements via its platform called EDITOR. Covered bond and other fixed income instruments are currently reported to rating agencies with a single, common reporting standard. Prometeia added value is provided by connecting with its Cloud services to EDITOR and performing regular tests on the underlying data pools.
From a technical perspective, the datasets uploaded from banks to EDW will be integrated with additional information required for the execution of Covered Bonds tests, made available by the banks that will apply for the new services. The ’extended’ Covered Bonds information flows will be processed by Prometeia analytical engines and then returned to banks via EDITOR.
For more information on our innovative services for Covered Bonds tests, please contact: firstname.lastname@example.org. A free trial is available for a limited period.