Investor Relations

Joint SDO funding model

The Nykredit Realkredit Group provides mortgage loans under two different brands – or mortgage banks: Nykredit Realkredit A/S and Totalkredit A/S.

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Joint funding between Nykredit and Totalkredit

All mortgage loans provided by Nykredit Realkredit A/S ("Nykredit") and Totalkredit A/S ("Totalkredit") are funded through the issuance of mortgage covered bonds in Nykredit.

Since 2005, Nykredit and Totalkredit have been authorised to jointly fund loans granted by Totalkredit through the issuance of mortgage bonds ("ROs") and, from 2007, SDOs in Nykredit.

The essence of the present joint funding model is that Totalkredit funds its loans through the issuance of a master bond with Nykredit as the only creditor. The master bond is a covered bond and serves as security for Nykredit's issuance of ROs and SDOs. It ensures that Totalkredit transfers all payments intended for the bondholders under loans granted by Totalkredit to Nykredit concurrently with Nykredit's payments to the bondholders at the latest. This means that the bondholders enjoy the same security as if Totalkredit's lending had been granted directly by Nykredit.

Joint funding has been utilised for all new mortgage loans originated by Totalkredit.

The authorisation from the Danish FSA for the joint funding and a detailed description of the model can be downloaded at the bottom of this page.

Joint funding between Totalkredit and partner banks

From 2014, a second joint funding model has been launched. Under this model, the banks that cooperate with Totalkredit can originate mortgage loans on their own balance sheets and transfer them to Totalkredit at a later stage.

The model is designed in accordance with Section 16 b-g of the Danish Financial Business Act and the Executive Order on Placement, Control of Separation and Settlement of Payments Received in Relation to Joint Funding. The model has been approved by the Danish FSA. There will be an additional approval process for each partner bank before the bank can implement the joint funding model.

Totalkredit must approve all loans prior to a transfer. At transfer to Totalkredit, each loan must comply with the requirements for property valuation and credit scoring of the customer and with maximum LTV limits. The originating bank retains part of the credit risk on the loans after they have been transferred to Totalkredit.

Once the mortgages have been transferred to Totalkredit, the loans will be funded via issuance of covered bonds (SDOs) from Nykredit as described above.

After the loan transfer, the bank continues to manage the customer relationship and maintains the role as loan servicer vis-à-vis the customer. Mortgage payments will be paid to the originating bank and promptly transferred to Totalkredit.