2019 to see tens of EU banks offering new low-carbon mortgages, says federation head

Italy, Sweden, Norway, Finland, the Netherlands and UK slated to form national ‘hubs’

By the end of the year, “three or four” banks in each EU country will have introduced energy efficiency mortgage products, predicted the Secretary General of the European Mortgage Federation, European Covered Bond Council.

Luca Bertalot told RI in an interview that the recent launch of EU-wide definitions of energy efficiency mortgages has kick-started a surge in product supply, which is expected to plump up the asset pool for green bonds in the region, too.

“In December, we published a common definition agreed at European level by 42 banks. This is a definition that can be used to create new product, but the idea is that banks tag those products as they issue them, so that we can collect data on risk and on energy consumption, and so on.”

In addition to requesting that banks update their IT systems accordingly, the initiative is also calling for formalised efforts at country level.

“We are asking every EU country to organise a national ‘market hub’, to discuss how the new definitions can be implemented into each market, and to create synergies – not just among banks, but also including the construction industry, municipalities and state players, for example.”Italy has already formed such a hub, which met for the first time last month. It comprises the 11 Italian banks that participated in the pilot scheme to develop the standards, along with other banks and the City of Milan.

“We’re promoting the same approach in other countries, and we’re expecting meetings in Finland, Norway, Sweden, Denmark, the Netherlands and the UK soon. We’re also working with Spain.”

Some banks in the EU – like Triodos, Rabobank and BPM (Italy’s third largest, formed in 2017 of Banco Popolare and Banca Popolare di Milano) – are already offering mortgages that are aligned with the new standards. But Bertalot says the official launch of the guidelines will boost issuance majorly over coming months.

“We already have 42 banks engaging on this, and a lot more are now coming to us to discuss joining the initiative. I would expect that by the end of the year, we will have at least three or four banks active in producing energy efficiency mortgages in every EU country,” he told RI.

The European Commission, which funded the energy efficiency mortgages initiative and will see its own mandate expire in the spring, has invited Bertalot to present the outcomes of the initiative in April in Riga.