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 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:
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 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)
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.
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 DKKbn 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 is expected to be phased in, at the earliest, in mid-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 28bn)
- 8 % of banking TLOF (~DKK 22bn)
Banking activity level:
Jyske Bank’s 2021 MREL requirement (applicable for banking activities only) was set by the Danish FSA in the Autumn of 2020.
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.
Looking at the required capital and MREL requirements based on end of Q4 2020 banking activity REA (DKK 104bn), and applying the 2021 requirements (in percentages) the Q1 2020 capital and MREL requirements are as follow:
Pillar I = 8 % of REA =
Pillar II = 3.6 % of REA = DKK 3.7bn
Pillar I + Pillar II total = DKK 12.1bn
To get to a total MREL of 26.3 % = DKK 27.4bn another DKK 15.3bn of MREL is needed = (DKK 27.4-12.1bn).
In addition, the CBR of 4 % (DKK 4.2bn) is added and the total capital and MREL requirement can therefore be calculated as DKK 31.6bn for Q1 2021.
Based on Q4 2020 banking activity REA (setting the MREL requirement) the 8 % of Group TLOF is currently the constraint (highest requirement) representing DKK 54bn end of Q4 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.
Please use these links to see:
- An illustration of the banking activity capital and MREL requirements and the available resources as of end of Q4 2020.
- An illustration of the Group MREL, capital and debt buffer requirements for Q1 2021 and the expected 8 % of Group TLOF requirement for 1 January 2022 (based on Q4 2020 TLOF)
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 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 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 CMS bonds outstanding in the market which 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 gained Tier 2 status under the CRR. Due to the additional requirements introduced in CRR2 the two CMS bonds will most likely in the future lose their capacity as capital instruments. It is our preliminary understanding that the Danish implementation of BRRD Article 48 (7) will make the instruments MREL compliant only.
The information Memorandums of the two bonds can be found below:
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 14-15bn (~EUR 1.6bn) NPS debt
• DKK 4-5bn (~EUR 0.6bn) PS debt.
During 2021 Jyske Bank expects to issue around:
~EUR 500m in PS format
~up to EUR 300m in NPS format (most likely issued in Nordic currencies)