Investors in debt & capital instruments

Get a quick overview of the Jyske Bank Group in the Credit Profile and find more information on funding and issuance of debt instruments in Funding Programs below.

Funding Programs

Jyske Bank issues bonds and debt instruments in the international financial markets. Debt instruments issued by Jyske Bank A/S can be rated by Standard & Poor’s, see ratings for the specific ratings applied to different types of debt instruments.

Short term funding
Jyske Bank set up a French commercial paper program in 2006 to strengthen diversification of short term funding sources and prolong the duration of the short term funding. Banque de France regulates the program and the Information Memorandum as well as market statistics can be found via the below links:

Long term funding
Jyske Bank set up an EMTN program in 1997. The first senior unsecured public benchmark bond was issued in 2003 and Jyske Bank has since 2011 been an active issuer in the European capital markets.

Jyske Bank's 2020 EMTN Prospectus includes the possibility to issue preferred senior (“PS”) notes as well as non-preferred senior (“NPS”) notes in addition to subordinated Tier 2 notes and AT1 notes. The Prospectus can be found below:

Jyske 2020 EMTN Prospectus & Supplements

The last public benchmark in PS format was issued in November 2017 (value date in December 2017) and Jyske Bank A/S currently has three PS public benchmark bonds in the market:

  • EUR 500m fixed rate bond maturing April 2021 (XS1395036947) – original maturity 5 years
  • EUR 500m floating rate bond maturing December 2022 (XS1726323436) - original maturity 5 years

On 31 August 2018 Jyske Bank issued the first NPS benchmark note in SEK, a total of SEK 1.75bn split between a fixed and a floating rate tranche:

  • SEK 750m fixed rate note maturing September 2023 (XS1877337151) – 5 year maturity
  • SEK 1bn floating rate note maturing September 2023 (XS1877345501) – 5 year maturity

On 28 November 2018 Jyske Bank issued the first NPS in EUR, a 3 year fixed rate EUR 500m benchmark bond:

  • EUR 500m fixed rate note maturing December 2021 (XS1918017259) – 3 year maturity

The second NPS in EUR was issued on 13 June 2019, a fixed rate EUR 500m benchmark bond in callable format (5NC4) :

  • EUR 500m fixed rate note (XS2015231413) – 5 year maturity (June 2024) but may be called by Jyske Bank in June 2023

The third NPS in EUR was issued on 8 October 2020, a fixed rate EUR 500m benchmark bond in callable format (5NC4) :

·         EUR 500m fixed rate note (XS2243666125)  – 5 year maturity (October 2025) but may be called by Jyske Bank in October 2024

For a full survey of the redemption profile of the Jyske Bank Groups long term debt please see Credit Profile above. 

MREL

MREL and the introduction of Non-Preferred Senior (“NPS”) debt in the Danish insolvency regime

The Danish Act No. 706 was adopted by the Danish Parliament on 8 June 2018 and became effective retroactively from 1 January 2018. The bill has created a new layer of creditors (holders of Non-Preferred debt) in the Danish insolvency regime for banks via an amendment to the Danish Act implementing Article 108 of the European Bank Recovery & Resolution Directive (BRRD). The new class of debt, Non-Preferred Senior (“NPS”), is positioned between ordinary senior claims (§97 in the Danish Bankruptcy Act, “Konkursloven”) and subordinated debt (§98 in the Danish Bankruptcy Act). Existing senior unsecured debt will remain ordinary senior claims (”simple krav”) which will rank ahead of NPS debt.  Existing senior unsecured debt will in the future be referred to as Preferred Senior (“PS”) debt to distinguish between the two asset classes.

The Act No. 706 also contains a new debt buffer requirement for Danish SIFI mortgage institutions to be fulfilled by 2022: The debt buffer for mortgage institutions must be above 2% of total unweighted loans and the sum of the group’s capital requirement, debt buffer requirement and bail-inable liabilities (“the combined requirement”) must be above 8% of the group’s total liabilities.

Jyske Banks MREL requirements

The Jyske Bank Group’s MREL comprises of:

  • Banking activity requirement
  • Mortgage activity requirement

Banking activity requirement

  • 2 x solvency requirement (loss absorption + recapitalisation) incl. all buffer requirements (counter cyclical buffer not double up)
  • Calculated on the basis of REA for banking activities only

Mortgage activity requirement:

  • Capital requirement (loss absorption) and the debt buffer for mortgage institutions which must be 2% of total unweighted mortgage loans

Group requirement:

  • The sum of the group’s capital requirement, debt buffer requirement and bail-inable liabilities must be above 8% of the group’s total liabilities and own funds (TLOF)
  • Group capital that is utilised towards the mortgage bank’s capital and debt buffer requirements is not eligible to count towards the MREL requirement
  • The 8% requirement must be fulfilled by 2022

The regulatory constraint will be the highest of the 8 % requirement and the combined requirement (MREL for banking activities + capital requirement for mortgage activities + mortgage debt buffer)

All PS debt issued prior to 1 January 2018 (with a residual maturity > 1 year) is grandfathered and eligible for the MREL requirements until end of 2021.

BRRD1:

When the MREL requirement came into force in Denmark 1 July 2019 the Danish FSA stated that from 2022 MREL should be fulfilled with contractually subordinated debt such as non-preferred senior (“NPS”) or capital.

Up to and including 2020 the MREL was set by the Danish FSA on an annual basis in December as a fixed requirement in DKKbn for the following year.

The 2020 MREL requirement was based on banking activity REA as of end of 2018 (DKK 111bn) and the capital requirements as of 2020 (except for Pillar II which was 2.8 % as of end of December 2018)

On 13 March 2020, the Danish FSA decided to reduce the countercyclical buffer from 1 % (planned to increase to 2 % by the end of 2020) to 0 % with effect from 16 March 2020 as a response to the impact of the Corona virus on the Danish economy. A new MREL requirement was set with effect from 16 March 2020:

MREL Requirement as set by Danish FSA for 2020
DKKbn
% of 2018 Banking REA
13.03.2020 – 31.12.2020
33.0
29.70%

BRRD2:

The implementation of the BRRD II rules in Danish legislation (no later than December 28, 2020) will impose a lower requirement for subordination than today. The expected subordination reduction was implemented in Denmark already on 1 May 2020 by the Danish FSA to reduce the need for NPS issuance from Danish banks in the light of COVID-19.

From 2021 the MREL will be set by the Danish FSA on an annual basis as a percentage (%) of banking REA. The percentage will remain fixed for the following year, but the actual requirement in DKKbn will be dynamic (an increase in banking REA will increase the MREL requirement and vice versa). If the capital requirements change (e.g. a reintroduction of the countercyclical buffer) the FSA will set a new MREL requirement in percentage of banking REA. Variations in Pillar II will not automatically trigger a new MREL requirement.

Jyske’s 2021 MREL requirement has been set by the Danish FSA in the Autumn of 2020 as 30.3 %. of banking REA:

26.3 % (hereof 22.3 % subordinated) +4 % (CET 1 combined buffer requirement) .Thus based on Q3 2020 figures:

  • Total MREL requirement for 2021 is DKK 32bn
  • The subordination requirement is DKK 28bn
  • The PS allowance constitutes approximately DKK 4bn as:

the upper limit for subordination in the BRRD2 is set at the highest of:
             - 2 x the solvency requirement plus 1 x the combined buffer  requirement (DKK 28bn)

   and

             - 8 % of banking TLOF (DKK 22bn)

Based on Q3 2020 banking REA the 8 % of Group TLOF is currently the constraint (highest requirement) representing DKK 52bn end of Q3 2020, whereas the combined requirement (MREL for banking activities + Jyske Realkredit capital requirement and debt buffer) represents DKK 50bn. But the difference is minor and everything else being equal the 8 % requirement will not necessarily be the highest in the future (new regulation driven increase in REA) versus loan portfolio growth and growth in overall balance sheet items.

Please use this link to see a graph which illustrates the MREL requirement for 2021 and the expected 8 % requirement for 1 January 2022

Funding plans (PS and/or NPS) 2021:

  • The BRRD2 subordination cap on the MREL requirement (for banking activities) applicable from 1 May 2020 opens up for issuance of DKK 4-5bn of PS debt.
  • Assuming full subordination of the 8 % of TLOF from 2022 (except the banking activity related MREL subordination cap), we estimate that our need for MREL debt instruments by 1 January 2022 will be an outstanding amount of MREL eligible NPS & PS instruments of around DKK 16bn (EUR 2.1bn) :
      • DKK 11-12bn (~EUR 1.6bn) NPS debt
      • DKK 4-5bn (~EUR 0.6bn) PS debt.

During 2021 Jyske Bank therefore expects to issue around:

  • ~EUR 600m in PS format (including one EUR 500m PS benchmark)
  • ~EUR 300m in NPS format (most likely to be issued in Nordic currency/currencies)

Capital instruments (Tier 2 and AT1)

Capital instruments issued after implementation of the CRR

Tier 2

In May 2016 Jyske Bank A/S issued SEK 1bn of 10NC5 subordinated Tier 2 bonds under the EMTN programme:

  • SEK 400m of Fixed Rate Notes (coupon of 3.25 %) XS1415181863
  • SEK 600m of Floating Rate Notes (interest rate of 3M STIBOR + 3.00 %) XS1415181608

Both bonds have final maturity in May 2026 and an issuers call right in May 2021. The bonds are rated BBB by S&P.

 

In March 2017 (with value date in April 2017) Jyske Bank A/S issued EUR 300m of 12NC7 subordinated Tier 2 bonds under the EMTN programme:

  • EUR 300m Fixed Rate Notes (coupon of 2.25 %) XS1592283391

The bond has final maturity in April 2029 and an issuers call right in April 2024. The bond is rated BBB by S&P.

In January 2020 Jyske Bank A/S issued EUR 200m of 11NC6 subordinated Tier 2 bonds under the EMTN programme:

  • EUR 200m Fixed Rate Notes (coupon of 1.25 %) XS2109391214

The bond has final maturity in January 2031 and an issuers call right in January 2026. The bond is rated BBB by S&P.

AT1

In September 2016 Jyske Bank A/S issued additional Tier 1 (AT1) capital under the CRR totalling approximately DKK 1.5bn:

  • SEK 1,250m of Floating Rate Notes (interest rate of 3M STIBOR + 5.80%) ISIN XS1489817525
  • DKK 500m of Floating Rate Notes (interest rate of 3M CIBOR + 5.30%) ISIN XS1489817442

The AT1 issues have perpetual maturity and may be called by Jyske Bank A/S in September 2021 at the earliest. The bonds are rated BB+ by S&P. 

 

In September 2017 Jyske Bank A/S issued EUR 150m additional Tier 1 (AT1) capital under the CRR:

  • EUR 150m of Fixed Rate Notes (interest rate of 4.75%) ISIN XS1577953331

The AT1 issue has perpetual maturity and may be called by Jyske Bank A/S in September 2027 at the earliest. The bonds are rated BB+ by S&P.

 

In April 2019 Jyske Bank A/S issued SEK 1bn additional Tier 1 (AT1) capital under the CRR:

  • SEK 1bn of Floating Rate Notes (interest rate of 3M STIBOR + 5 %) ISIN XS1843442119

The AT1 issue has perpetual maturity and may be called by Jyske Bank A/S in April 2024 at the earliest. The bonds are rated BB+ by S&P.

 

The Prospectuses for the four AT1 capital issues can be found below:

AT1 prospectuses (DKK 500m, SEK 1,250m, EUR 150m and SEK 1bn)

Capital instruments issued before CRR

Jyske Bank A/S has two supplementary capital CMS bonds outstanding in the market that were issued in 2004 and 2005 as hybrid Tier 1 instruments. Their capital capacity as additional Tier 1 is gradually phased out according to the CRR Grandfathering rules but according to article 63 of the CRR they subsequently gain Tier 2 status under the CRR.

The information Memorandums of the two bonds can be found below:

Jyske Hybrid €100m Final Offering circular 2005 [PDF]

Jyske Hybrid €125m Final Offering circular 2004 [PDF]