Íslandsbanki permitted by the FSA to issue Covered Bonds
Islandsbanki has been granted a licence by the Icelandic Financial Surveillance Authority (FSA) to issue Covered bonds. This is a part of the funding strategy of Islandsbanki, which is intended to broaden the funding sources of the bank. Today, deposits count for up to 75% of Islandsbanki´s funding, but in the future goal is to lower that ratio and make the bank less dependent on deposits as a funding source. It is estimated that up to ISK 5 billion will be offered to investors in 2011.
The Covered bonds will be offered primarily to investors in Iceland and Islandsbanki will thus be the first issuer of new bonds on the NASDAQ OMX Iceland stock Exchange. The Covered Bonds are issued pursuant to Icelandic law on Covered Bonds nr. 11 from 2008, which imposes strict requirements on any Issuer. For example, the collateral is required to pass a weekly stress test in regards to interest rates and currency rate fluctuations. The Icelandic FSA will carefully monitor covered bond issuance.