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 2007 been an active player in the EMTN market. Jyske Bank has focused on issuance of senior unsecured EUR public benchmarks with regular intervals to maintain access to a diversified base of European debt capital market investors.

Jyske Bank's 2019 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 2019 EMTN Prospectus

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 floating rate bond maturing June 2020 (XS1622575360) – original maturity 3 years
  • 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

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 requirement

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 preferred senior (“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.
  • From 2022 MREL must be fulfilled with contractually subordinated debt such as non-preferred senior (“NPS”) or capital.

Currently the MREL is set by the Danish FSA on an annual basis in December as a fixed requirement in DKKbn for the following year.

On 13 March 2020, the Danish FSA decided to release 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.

  • The 2020 MREL requirement is based on banking activity REA as of end of 2018 (DKK 111bn) and the capital requirements as of 2020 (but with Pillar 2 as of end December 2018).
MREL Requirement as set by Danish FSA from 16 March 2020
DKKbn
% of 2018 Banking REA
13.03.2020 – 31.12.2020
33
29.7%

Using Q1 2020 capital requirements (and balance sheet figures as of end of 2019), the expected MREL requirement for 2021 can be calculated as DKK 31.4bn.

In the graphs, expected requirements by 2021 and 2022 have been translated to a percentage of end of Q1 2020 Group REA of DKK 182.9bn.

BRRD2 subordination cap applicable from 1 May 2020

The BRRD2 “subordination cap” applicable from 28 December 2020 was accelerated by the Danish FSA to come into force already on 1 May 2020. It refers to banking activity MREL only.

The subordination cap allows for a share of the MREL requirement to be fulfilled by PS instead of NPS. The cap is set as the proportion of the MREL req. being above the higher of:

  • 2 x (Pillar I + Pillar II) + 1 x the CBR = DKK 27.2bn
  • 8 % of banking activity TLOF = DKK 23.8bn.

For the Jyske Bank Group this implies that expectedly DKK 4.2bn (2021) can be fulfilled via issuance of PS instead of NPS.

New debt buffer requirement from 2022 and onwards

The 8 % of Group TLOF req. will apply for SIFI mortgage institutions or Financial Groups with mortgage activities (such as Jyske Bank) from 1 January 2022. 

Based on Q1 2020 Group TLOF this corresponds to DKK 54bn. The increase in the requirement (distance between the DKK 54bn and the DKK 49bn) will be enforced as an increase of the debt buffer requirement in Jyske Realkredit.

Jyske Bank currently awaits clarification from the Danish FSA in relation to how the subordination cap shall be interpreted  for 8 % of  Group TLOF requirement from 2022 and onwards.

Funding strategy & funding plans 2020-2021

  • It has been part of our funding strategy for years to issue on a regular (annual) basis in the international capital markets.
  • During 2018-2019 we have had continued focus on the gradual replacement of old grandfathered PS with new NPS debt.
  • The release of the CCB in March 2020 reduced Jyske Banks need for new NPS issuance during 2020 from the previously expected EUR 750m.
  • 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.
  • Following the Danish FSA’s announcement on 1 May 2020 full clarification is not yet obtained with respect to the Danish subordination requirement in BRRD2 of the 8 % of TLOF requirement in force from 2022. 
  • 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 by 1 January 2022 will be an outstanding amount of MREL eligible NPS & PS instruments of around:
    •  DKK 12bn (~EUR 1.6bn) NPS debt
    •  DKK 4bn (~EUR 0.6bn) PS debt.
  • Jyske has no new issuance plans during 1H 2020.
  • Jyske Bank may access the market for PS and/or NPS during 2H 2020/Q4 2020 depending among others on the development in the regulatory landscape and market conditions.

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]