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 2022 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:
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 applies from 1 January 2022 and the regulatory constraint is therefore 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)
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 DKK bn and vice versa).
- If the capital requirements change (e.g., the reintroduction of the countercyclical buffer (“CCyB”)), the FSA sets a new MREL requirement as a percentage of banking activity REA.
- Variations in Pillar II will not automatically trigger a new MREL requirement.
The CCyB requirement is phased in again gradually with 1 % from Q3 2022 (30 September 2022) and increases to 2 % from Q4 2022 (31 December 2022).
Requirements for banking activities & upper limit for subordination
BRRD II imposes an upper limit for subordination in the MREL requirement related to banking activities, set as the highest of:
a) 2 x the solvency requirement plus 1 x the combined buffer requirement (~DKK 31bn)
b) 8 % of banking TLOF (~DKK 22bn)
For the Jyske Bank Group’s banking activity MREL, “a” is the highest. Consequently, the PS allowance for the Jyske Bank Group is 4% of banking activity REA (DKK 121bn end of March 2022) which mirrors the combined buffer requirement (“CBR”) excl. of the CCyB and can be calculated as DKK 4.8bn as at end of March 2022.
Jyske Bank’s capital requirements and the actual 2022 MREL requirement for banking activities, as set by the Danish FSA in December 2021 for 2022 as a percentage of banking activity REA are illustrated in the table below.
The increase reflects the reintroduction of the CCyB.
|Jyske Bank – banking activity capital & MREL requirement||Q1-Q2 2022||Q3 2022||Q4 2022|
See this graph for a graphic overview. The yellow “MREL resources March 2022” reflect the Group capital (CET1, AT1, Tier 2) as well as NPS and MREL eligible PS available as at end March 2022 (*incl. of SEK 3bn of preferred senior debt issued in April 2022) to comply with the banking activity capital and MREL requirements (after deducting resources needed in JRK). As the MREL requirement was fixed by the Danish FSA for all 2022 based on end December 2020 Pillar II (which was 3.6 %), the light green MREL of 16.6 % in the graph is a residual. It is calculated as the subordination requirement as at 1st January 2022 (27.3%) minus the actual end of March 2022 Pillar I & Pillar II requirements (8% + 2.7%). As illustrated in the graph, the implementation of the CCyB increases the need for subordinated resources (CET1). For simplicity, the red dotted line reflects the PS allowance (non-subordinated part of the total capital and MREL requirements), but obviously the CBR must be subordinated as it is to be fulfilled by CET1.
Group level requirements for 2022 are illustrated with a forward-looking view based on actual end March 2022 REA, TLOF as well as Pillar II. See this graph for an overview. As illustrated in the graph the 8% of TLOF Group requirement is not the constraint. The reintroduction of the CCyB from Q3 2022 adds further distance between the 8% of TLOF and the “combined requirement”.
Debt instruments (senior preferred & senior non-preferred)
Below you can find an overview of outstanding benchmark bond issues and download the Final Terms of the bond issues.
S&P ratings of the senior bonds: A for preferred senior, BBB+ for non-preferred senior.
Preferred senior benchmark bonds in the market:
- EUR 500m floating rate bond maturing December 2022 (XS1726323436) – 5 years maturity
- EUR 500m preferred senior fixed rate note (XS2409134371) – 6.25 year maturity (February 2028) but may be called by Jyske Bank in February 2027 (6.25NC5.25 structure)
- SEK 1.2bn fixed rate bond (XS2468436949) – 3 year maturity (April 2025) but may be called by Jyske Bank in April 2024 (3NC2 structure)
- SEK 1.8bn floating rate bond (XS2468437160) – 3 year maturity (April 2025) but may be called by Jyske Bank in April 2024 (3NC2 structure)
Non-Preferred senior benchmark bonds in the market:
- SEK 750m fixed rate note maturing September 2023 (XS1877337151) – 5 year maturity
- SEK 1bn floating rate note maturing September 2023 (XS1877345501) – 5 year maturity
- EUR 500m fixed rate note (XS2015231413) – 5 year maturity (June 2024) but may be called by Jyske Bank in June 2023 (5NC4 structure)
- EUR 500m fixed rate note (XS2243666125) – 5 year maturity (October 2025) but may be called by Jyske Bank in October 2024 (5NC4 structure)
- EUR 500m non preferred senior fixed rate note (XS2382849888) – green bond – 5 year maturity (September 2026) but may be called by Jyske Bank in September 2025 (5NC4 structure)
See more about green bonds under Green bonds further below.
For a full survey of the redemption profile of the Jyske Bank Groups long term debt please see Credit Profile above.
Capital instruments (Tier 2 and AT1)
Tier 2 bonds
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 2017 Jyske Bank A/S issued EUR 150m additional Tier 1 (AT1) capital:
- 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:
- 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 two standalone AT1 capital issues can be found below:
AT1 prospectuses (EUR 150m and SEK 1bn)
On 26 May 2021 (with value date 4th June 2021) Jyske Bank A/S issued EUR 200m additional Tier 1 (AT1) capital:
- EUR 200m of Fixed Rate Notes (interest rate of 3.625%) ISIN XS XS2348324687
The AT1 issue has perpetual maturity and may be called by Jyske Bank A/S at any date from 4 December 2028 to (and including) the First Reset Date (6-month par call) or any Interest Payment Date thereafter.
The bonds are rated BB+ by S&P and are issued under Jyske Bank’s EMTN program.
Climate is a material impact area for Jyske Bank, and we have focus on identifying business areas that can contribute to sustainable solutions and help to reduce CO2e-emissions.
To support the growth of our lending for sustainable activities, we have defined principles for financing of sustainable lending through the issue of Green Bonds from both Jyske Bank A/S and Jyske Realkredit A/S.
The principles for Green Bonds issued by the Jyske Bank Group have been defined according to ICMA’s Green Bond Principles and follow the guidelines for selection, reporting and allocation of funds.
An independent assessment of our Group Green Finance Framework has been performed by Sustainalytics. Sustainalytics concludes that “the Jyske Bank Group Green Finance Framework is credible and impactful”.
For more information on our Green Finance Framework and to see the 2nd party opinion from Sustainalytics please use these links:
Green bonds issued by Jyske Bank:
- EUR 500m non preferred senior fixed rate note (XS2382849888) – 5 year maturity (September 2025) but may be called by Jyske Bank in September 2024 (5NC4 structure)
Funding plans & issuance of capital instruments
Overall issuance of capital instruments (AT1 and Tier 2) is driven by regulatory requirements. Ongoing capital management aims to keep the outstanding amount of such instruments at a fixed percentage of REA to optimize capital structure.
Senior issuance is driven primarily by MREL requirements but might also be influenced by NSFR. Jyske Bank’s recurring funding plan will include an annual senior benchmark bond (EUR 500m) as one of the most important elements.
The Danish MREL requirements have been fully phased in for SIFIs.
Jyske Bank’s acquisition of Handelsbanken Denmark announced on 20 June 2022 (predominantly branch assets – see here for an overview of the M&A transaction) has altered Jyske Bank’s funding plans for 2H 2022, as capitalization and funding is to be in place before closing of the deal which is expected before year end 2022.
The acquired assets will increase Jyske Bank’s MREL requirement. Based on the expected REA increase in 2H 2022 from the acquired assets and expected impact of changed regulation, Jyske Banks predicts a need for an outstanding volume of MREL eligible debt instruments in the region of DKK 24 – 26bn (EUR 3.2-3.5bn) by year-end 2022, split between:
- DKK 18 – 20 bn (~EUR 2.5bn) NPS debt
- DKK 6bn (~EUR 0.8bn) PS debt
The predicted amount of outstanding MREL eligible instruments reflect the statutory requirements as well as an internal buffer to the statutory requirements.
Funding plan 2H 2022
PS and NPS:
~EUR 750m-EUR 1bn in NPS format (1-2 EUR benchmarks)
Additional issuance of PS may occur dependent on loan growth and other balance sheet developments, e.g. deposit trends.
The M&A transaction is to be capitalized by issuance of DKK 2.5bn of capital instruments. Jyske Bank therefore intends to issue – most likely during Q3 2022:
- AT1: EUR 200m
- Tier 2: EUR 150m/or the equivalent amount in Nordic currencies