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 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:
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 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
Jyske Bank’s MREL comprises of:
– Banking activity requirement
– Mortgage activity requirement
Banking activity requirement
– 2 x solvency requirement incl. all buffer requirements (counter cyclical buffer not double up)
– Calculated on the basis of REA for banking activities only
Mortgage activity requirement:
– The debt buffer for mortgage institutions must be 2% of total unweighted mortgage loans
– 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
– 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
- Jyske Bank must comply with the MREL requirement from 1 July 2019.
- The MREL will be set by the Danish FSA on an annual basis (a fixed requirement in DKKbn):
- The MREL requirement for 2019 has been set as 28.9 % of banking activity REA end of 2017 (DKK 116bn) corresponding to DKK 33bn. On 30 September 2019 the MREL requirement will increase to 29.4 % due to the increase in the countercyclical buffer from 0.5 % to 1 % corresponding to an MREL requirement of DKK 34bn.
- In the autumn of 2019 or early 2020 the MREL requirement for 2020 will be set based on 2018 REA.
- All Preferred Senior (“PS”) debt issued prior to 1 January 2018 is grandfathered and eligible for the MREL requirements until end of 2021 (if residual maturity > 1 year).
- From 2022 MREL must be fulfilled with contractually subordinated debt (non-preferred senior (“NPS”)) or capital.
- Jyske Bank already fulfills MREL (with old PS bonds, new NPS and capital).
See below for an overview of the Jyske Bank Groups position in a forward looking and conservative (incl. of full debt buffer, full SIFI and capital conservation buffer and the 1 % countercyclical buffer) illustration of the expected MREL requirements and the new debt buffer requirement where all ratios have been translated to a per cent of end of 1H 2019 REA.
What you can see from the graph is that:
- The Group is already compliant both with the so-called “expected combined requirement” (MREL for banking activities + capital requirement of Jyske Realkredit + Jyske Realkredit debt buffer AND the min. 8 % MREL of total Group liabilities) based on our current capital, new NPS and grandfathered preferred senior bonds.
- The forward looking “combined requirement” is 28 % of Group REA (DKK 54.7bn), the 8 % MREL of total liabilities is DKK 51.7bn) but Jyske as of end of 1H 2019 has capital and eligible liabilities representing 30.1 % of Group REA (DKK 58.7bn).
- As the Group has a relatively large proportion of bank loans the “combined requirement” and not the 8 % requirement will be the constraint, still we do have a buffer of roughly 2 % of REA (DKK 4bn) as of end of 1H 2019.
Preferred and non-preferred issuance plans:
- We will continue the gradual replacement of the remaining DKK 11bn of old grandfathered preferred senior with residual maturity longer than 1 year with new NPS debt.
- Our guidance (which is also the basis for S&P’s positive ALAC driven outlook on our SP ratings) is that Jyske Bank intends to maintain an outstanding amount of eligible NPS issues of approx. EUR 2.5bn
- Net of the three outstanding NPS bond issues we need to issue approx. EUR 1.3bn of new NPS debt before the end of 2021.
- One EUR 500m benchmark a year is expected (two in 2020 as we also need to refinance the 3 year bond issued end of 2018 - most likely during 2H 2020).
- Next NPS EUR benchmark to build up the stock of NPS debt is planned during 1H 2020 (subject to market conditions – most likely in Q1 2020).
- Once the NPS buffer has been built we expect to maintain annual benchmark issuance to refinance/keep our capital market presence which has always been a key element in our funding strategy.
- No preferred senior issuance is planned for the short to medium term
- Whether the preferred senior format will again be a funding tool for Jyske will solely depend on the balance sheet development (the relation between bank loans and bank deposits)
- If at some stage in the future long term funding will be needed for a pure NSFR or S&P SFR purpose we will opt for the preferred senior format (out of a cost focus).
Capital instruments (Tier 2 and AT1)
Capital instruments issued after implementation of the CRR
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 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:
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: