The covered bond market is attracting serious attention from many banks looking to expand their future funding choices. This interest is due to several factors: regulatory changes (IAS 39 and Basel II) which increasingly affect the banking industry; funding advantages; and the excellent track record the product offers. Covered bonds will help banks obtain easier access to international capital market, lower funding costs, access to a wider investor base and an increased scope of balance sheet management flexibility. Over the past decade, the product has received a positive reception in an increasing number of European countries and, at ABN AMRO, we expect it soon to be adopted by the banking industries in other continents.
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