...Broadly Stable Asset Encumbrance: In the past three years, cover pool encumbrance has remained broadly stable, averaging 10%. This is based on a sample of 142 entities (100 banking groups) worldwide, rated by Fitch Ratings. Cover pools alone constitute significant encumbrance for only a small number of rated banks: 15 have cover pool encumbrance above 50%, of which only six are above 70% at end-2013. Same Countries Top List: The top of the sample essentially comprises Scandinavian, German and Spanish banks. Fitch believes that covered bond funding can be a stable form of funding, particularly in markets where there is a large captive domestic investor base, as is the case in Sweden and Denmark. German, French, Spanish Encumbrance Falls: Average encumbrance reduced at German, French and Spanish banks in 2013, reflecting deleveraging and reduction in eligible public- sector assets in Germany, focus on senior unsecured issuance in France and a mix of asset and liability changes in Spain. This...
