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.
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 2021 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:
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
- 2 x solvency requirement (loss absorption + recapitalisation) incl. all buffer requirements (counter cyclical buffer not doubled 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 banking activity MREL requirement.
The 8% of Group TLOF requirement must be fulfilled by 1 January 2022.
From 1 January 2022, the
regulatory constraint will therefore be the highest of the 8 % of Group TLOF
requirement and the combined requirement (MREL for banking activities + capital
requirement for mortgage activities + mortgage debt buffer)
The Danish grandfathering rules allow for all preferred senior (“PS”) debt issued prior to 1 January 2018 (with a residual maturity > 1 year) to be eligible for the MREL requirements until the end of 2021.
BRRD2 has replaced BRRD1:
From 2021 the MREL is set by the Danish FSA on an annual basis as a percentage (%) of banking activity 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 in DKK bn and vice versa).
- If the capital requirements change (e.g. a reintroduction of the countercyclical buffer), the FSA will set a new MREL requirement as a percentage of banking activity REA.
- Variations in Pillar II will not automatically trigger a new MREL requirement.
The countercyclical buffer requirement will be phased in again from Q3 2022 - where it constitute 1 % as from 30 September 2022.
The implementation of the BRRD II rules imposed a lower requirement for subordination in the banking activity MREL requirement than under BRRD1.
The 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.
The upper limit for subordination
in MREL requirement in the BRRD2 is set at the highest of:
- 2 x the solvency requirement plus 1 x the combined buffer requirement (~DKK 30bn)
- 8 % of banking TLOF (~DKK 22bn)
Banking activity level – the actual requirement for Q2 2021 (backwards looking - based on percentage fixed by the Danish FSA for 2021):
With BRRD2 it’s in principle divided into different sub-components – and thereafter split into a subordinated requirement and a non-subordinated requirement.
Looking at the MREL percentage fixed by the Danish FSA and applicable for 2021:
- The MREL requirement is 26.3 %. of banking activity REA.
- 22.3 % hereof must be subordinated
- The “non-subordinated allowance” is 4 %
- On top of the MREL requirement comes a +4 % CET 1 combined buffer requirement (“CBR”)
Previously – under BRRD1 – the sum of these two requirements (30.3 %) was represented as the MREL requirement.
The banking activity requirement presented in this graph is based on the actual 2021 MREL requirement which was set by the Danish FSA in the Autumn of 2020.
Pillar I = 8 % of REA
Pillar II = 3.5 % of REA = DKK 3.7bn
Pillar I + Pillar II total = DKK 12.6bn
To get to a total MREL of 26.3 % = DKK 29.3bn, another DKK 16.7bn of MREL is needed = (DKK 29.3-12.6bn).
In addition, the CBR of 4 % (DKK 4.4bn) is added and the total capital and MREL requirement can therefore be calculated as DKK 33.8bn for Q2 2021.
As can be seen in the graph Jyske Bank has a solid buffer to the actual requirements (35.3 % resources available for the 30.3 % requirement).
Group level & group requirement – expected requirement for 2022 (forward looking based on actual Q2 2021 Pillar II)
See the expected Group requirements in this graph. The expected Group requirements for 2022 are based not only on the actual Q2 2021 banking activity REA (DKK 112bn) and the actual group TLOF (657bn) but also applying the actual capital requirements for Q2 2021 with a Pillar II requirement of 3.3 % (the MREL and CBR would then constitute 30.6 % of banking activity REA). Thus there is a small difference between the expected banking activity MREL+ CBR for 2022 (DKK 34.2bn) and the actual Q2 2021 MREL & CBR requirement (DKK 33.8bn).
Based on Q2 2021 numbers, the 8 % of Group TLOF is currently the constraint (highest requirement) representing DKK 52.5bn, whereas the combined requirement (MREL for banking activities + Jyske Realkredit capital requirement and debt buffer) represents DKK 51.6bn. But the difference is very small and due to the effects of EBA guidelines and Basel IV, the 8 % requirement will not necessarily continue to be the highest in the future.
Debt instruments (senior preferred & senior non-preferred)
Below you can find an overview of outstanding benchmark bond issues and download the Final Terms of the bond issues.
S&P ratings of the senior bonds: A for preferred senior, BBB+ for non-preferred senior.
Preferred senior benchmark bonds in the market:
- EUR 500m floating rate bond maturing December 2022 (XS1726323436) – 5 years maturity
Non-Preferred senior benchmark bonds in the market:
- SEK 750m fixed rate note maturing September 2023 (XS1877337151) – 5 year maturity
- SEK 1bn floating rate note maturing September 2023 (XS1877345501) – 5 year maturity
- EUR 500m fixed rate note maturing December 2021 (XS1918017259) – 3 year maturity
- EUR 500m fixed rate note (XS2015231413) – 5 year maturity (June 2024) but may be called by Jyske Bank in June 2023 (5NC4 structure)
- EUR 500m fixed rate note (XS2243666125) – 5 year maturity (October 2025) but may be called by Jyske Bank in October 2024 (5NC4 structure)
- EUR 500m non preferred senior fixed rate note (XS2382849888) – green bond – 5 year maturity (September 2025) but may be called by Jyske Bank in September 2024 (5NC4 structure)
See more about green bonds under Green bonds further below.
For a full survey of the redemption profile of the Jyske Bank Groups long term debt please see Credit Profile above.
Capital instruments (Tier 2 and AT1)
Tier 2 bonds
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.
In March 2021 Jyske Bank A/S issued dual-tranche SEK & NOK 10NC5 subordinated Tier 2 bonds under the EMTN programme:
- NOK 1bn Floating Rate Notes (interest rate of 3M Nibor + 1.28 %) NO0010960446
- SEK 1bn Floating Rate Notes (interest rate of 3M Stibor + 1.25 %) XS2322705356
The bonds have final maturity in March 2031 and an issuers call right in March 2026. The bonds are rated BBB by S&P.
In September 2017 Jyske Bank A/S issued EUR 150m additional Tier 1 (AT1) capital:
- 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:
- 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 two standalone AT1 capital issues can be found below:
AT1 prospectuses (EUR 150m and SEK 1bn)
On 26 May 2021 (with value date 4th June 2021) Jyske Bank A/S issued EUR 200m additional Tier 1 (AT1) capital:
- EUR 200m of Fixed Rate Notes (interest rate of 3.625%) ISIN XS XS2348324687
The AT1 issue has perpetual maturity and may be called by Jyske Bank A/S at any date from 4 December 2028 to (and including) the First Reset Date (6-month par call) or any Interest Payment Date thereafter.
The bonds are rated BB+ by S&P and are issued under Jyske Bank’s EMTN program.
Climate is a material impact area for Jyske Bank, and we have focus on identifying business areas that can contribute to sustainable solutions and help to reduce CO2e-emissions.
To support the growth of our lending for sustainable activities, we have defined principles for financing of sustainable lending through the issue of Green Bonds from both Jyske Bank A/S and Jyske Realkredit A/S.
The principles for Green Bonds issued by the Jyske Bank Group have been defined according to ICMA’s Green Bond Principles and follow the guidelines for selection, reporting and allocation of funds.
An independent assessment of our Group Green Finance Framework has been performed by Sustainalytics. Sustainalytics concludes that “the Jyske Bank Group Green Finance Framework is credible and impactful”.
For more information on our Green Finance Framework and to see the 2nd party opinion from Systainalytics please use these links:
Green bonds issued by Jyske Bank:
- EUR 500m non preferred senior fixed rate note (XS2382849888) – 5 year maturity (September 2025) but may be called by Jyske Bank in September 2024 (5NC4 structure)
It’s an integrated part of Jyske Bank's strategic liquidity management to maintain on-going issuance in the international capital markets in order to ensure strong access to a diversified investor base.
Capital issuance (AT1 and Tier 2) is driven by regulatory requirements, changes in REA, new regulation and ongoing capital management.
Senior issuance is driven by MREL requirements and Jyske Bank’s funding plan will include an annual senior benchmark bond (EUR 500m) as one of the most important elements.
When the MREL requirements have been fully phased in 1 January 2022, Jyske Bank expects a need (including internal buffer in relation to statutory requirements) of DKK 18 – 20bn (EUR 2.4-2.7bn) of MREL eligible debt instruments:
• DKK 14-16bn (~EUR 2bn) NPS debt
• DKK 4-5bn (~EUR 0.6bn) PS debt.
During 2nd half of 2021 Jyske Bank expects to issue:
~EUR 500m in PS format (one EUR benchmark)