Bulletin: Euroclear Bank?s Increased CD Program Size Is Leverage Neutral

MILAN (S&P Global Ratings) May 17, 2019--S&P Global Ratings believes the upsizing of Euroclear Bank S.A./N.V. SA/NV (AA/Stable/A—1+) certificates of deposits (CD) program won't increase the bank's leverage position. Although Euroclear Bank announced the increase in the CD program to €20 billion from €3 billion, we expect its CD issuancewill remain stable at €2.0 billion-€2.5 billion. CD issuance helps Euroclear Bank meet its Cover 2 liquidity requirements under the Central Securities Depositories Regulation (CSDR). We estimate that €2.5 billion-€3 billion of the €17 billion program increase constitutes a contingency reserve, for example, if the long-term funding were to close, and that €15 billion could provide funding in an extreme market stress that goes beyond the CSDR's current liquidity buffer requirements.

...May 17, 2019 MILAN (S&P Global Ratings) May 17, 2019--S&P Global Ratings believes the upsizing of Euroclear Bank S.A./N.V. SA/NV (##/Stable/A--1+) certificates of deposits (CD) program won't increase the bank's leverage position. Although Euroclear Bank announced the increase in the CD program to 20 billion from 3 billion, we expect its CD issuancewill remain stable at 2.0 billion-2.5 billion. CD issuance helps Euroclear Bank meet its Cover 2 liquidity requirements under the Central Securities Depositories Regulation (CSDR). We estimate that 2.5 billion-3 billion of the 17 billion program increase constitutes a contingency reserve, for example, if the long-term funding were to close, and that 15 billion could provide funding in an extreme market stress that goes beyond the CSDR's current liquidity buffer requirements. In April 2019, following discussion with its regulator, Euroclear updated the terms and conditions governing the use of its settlement system. The updated terms envisage that,...

Bulletin