FSA learns to love covered bonds

A year after it dismayed UK issuers by suggesting a 4% guideline for assessing covered bond issuance, the Financial Services Authority has given covered bonds its blessing.

Managing risk

In a letter to the British Bankers’ Association on August 4, the FSA says it would still expect issuers to tell it if their covered bond issuance exceeded 4% of total assets, but most banks would only have to increase their individual capital ratios (ICRs) when issuance reached 20%.