With effect from 31 December 2013, all banks incorporated in Singapore and licensed by the Monetary Authority of Singapore (the “MAS”) to conduct banking business are permitted to issue covered bonds subject to conditions under MAS Notice 648 Issuance of Covered Bonds by Banks Incorporated in Singapore (“MAS Notice 648”) issued on 31 December 2013.

By way of background, in March 2012, the MAS issued a consultation paper and sought feedback on a draft version of MAS Notice 648 and proposed rules for the issuance of covered bonds by banks incorporated in Singapore. On 31 December 2013, the MAS issued its response to the feedback received.

Encumbrance limit

The aggregate value of assets in the cover pools for all covered bonds issued by a bank must not exceed 4% of the value of the total assets of the bank at all times. The total assets of the bank include the assets of the overseas branches of the bank incorporated in Singapore but not its subsidiaries, whether in Singapore or overseas.

Advance notification of issuance of new covered bonds

MAS Notice 648 requires banks to submit information on their covered bond programmes to the MAS at least one month in advance of the issuance of covered bonds. In addition, the bank has to notify the MAS in writing at least three business days prior to the issuance of any covered bonds, provided that the bank has already submitted information to notify the MAS on its covered bond programme a month in advance.

Reference materials

The following materials are available from the MAS website www.mas.gov.sg: