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 Credit Profile
|December 2018||Jyske Bank Credit Profile in English [PDF]|
|Dezember 2018||Jyske Bank Credit Profile in German [PDF]|
|Décembre 2018||Jyske Bank Credit Profile in French [PDF]|
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 2018 EMTN Prospectus includes the possibility to issue senior preferred (“SP”) notes as well as senior non preferred (“SNP”) notes in addition to subordinated Tier 2 notes. The Prospectus can be found below:
The last public benchmark in SP format was issued in November 2017 (value date in December 2017) and Jyske Bank A/S currently has three SP 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
For a full survey of the redemption profile of the Jyske Bank Groups long term debt please see Credit Profile above.
MREL & 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. All PS debt issued by Danish banks prior to 1 January 2018 will be grandfathered and eligible for the MREL requirements until the end of 2021. From 2022 MREL must be fulfilled with contractually subordinated debt (NPS debt or capital).
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 and planned NPS issuance
Jyske Bank’s final MREL was set by Danish FSA in February 2018 based upon 2016 YE balance sheet.
It comprises of:
- Banking activity requirement
- Mortgage activity requirement
Banking activity requirement
- 2 x solvency requirement incl. all buffer requirements corresponding to 28.1% of REA ex mortgage activities
- DKK 33bn as per end-2016
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
The MREL will be set by the Danish FSA on an annual basis (a fixed requirement in DKKbn):
- In the autumn of 2018 the MREL requirement for 2019 will be set based on 2017 REA (DKK 188bn).
- In the autumn of 2019 the MREL requirement for 2020 will be set based on 2018 REA
As of end of Q3 2018 Jyske Bank already fulfills MREL (with old PS bonds and capital).
Jyske Bank will gradually replace the existing PS debt with MREL eligible instruments (NPS notes) from 2nd half of 2018 until end of 2021:
- Total expected NPS issuance during the period 1H 2018 until end of 2021 is EUR 2.5bn.
- As of December 2018 NPS bonds equivalent to EUR 670m have been issued.
- Jyske Bank expects to remain active in the EUR market with one annual EUR 500m benchmark in NPS format from 2019-2021.
- From 2022 and onwards annual EUR issuance activity in the NPS format (EUR 500m benchmark) is also to be expected
- No PS issuance is expected in the short to medium term. Long-term the need for PS will depend on the structural development in bank deposits and bank loans.
Please see below (all components presented as a percent of Q3 2018 Group REA) a conservative illustration of the expected MREL requirement and the new debt buffer requirement for the Jyske Bank Group based on the following assumptions:
- Fully implemented SIFI and capital conservation buffer.
- Incl. of the 1 % counter-cyclical buffer to be implemented during 2019 (0.5 % from Q1 2019 and 0.5 % from Q3 2019)
- It is expected that the countercyclical buffer will not be part of the recapitalization amount.
- Incl. of the full 2 % debt buffer in Jyske Realkredit.
- *Jyske Bank’s latest EUR 500m 3 year NPS issued end of November 2018 is included in “Current capital and eligible liabilities”.
As the Group has a relatively large proportion of bank loans the expected “combined requirement” and not the 8 % requirement will be the constraint.
As of end of September 2018 the Group still has a buffer of 2.4 % of REA (DKK 4.4bn) to the expected “combined requirement” of 27.6 % of Group REA (DKK 50.4bn).
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.
The Prospectuses for the three AT1 capital issues can be found below:
Capital instruments issued before CRR
Jyske Bank A/S’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 will be phased out according to the CRR Grandfathering rules but according to article 63 of the CRR they subsequently gain permanent Tier 2 status under the CRR.
The information Memorandums of the two bonds can be found below: