General rules

Banks and central counterparties applying for loans from Norges Bank must accept and sign the "Terms and conditions for account management at Norges Bank" and pledge eligible collateral in favour of Norges Bank.

Opening hours

The collateral for loans system follows the opening hours for Norges Bank's settlement system (NBO), ie Monday to Friday from 5:30 a.m. to 4:30 p.m. Submission of new collateral loan pledges and release of collateral that can be performed automatically will be carried out during opening hours. Processing of manual orders is described below. See also the NBO operating schedule.

List of approved securities and fund units

See "Overview of Securities approved as collateral for banks' loans". A security will retain its approved status for up to 6 months after it ceases to be used as collateral.

Approval of new securities

Securities (ISIN) and fund units (ISIN) that are not included in the list of approved collateral on Norges Bank's website must be assessed before they can be approved. An assessment will be made when banks or central counterparties have pledged a new ISIN as collateral with VPS, Euroclear Bank or Clearstream Banking. New ISINs can subsequently be approved under the Norges Bank guidelines. Each bank or central counterparty is responsible for ensuring that the securities it pledges as collateral meet the requirements in the guidelines for collateral for loans from Norges Bank. Banks or central counterparties wishing to deposit new asset-backed securities (ABSs) or securities fund units must fill out and submit the application form for approval of new securities and enclose the relevant documentation.

Once securities have been pledged as collateral, Norges Bank will immediately receive a message from the central securities depository and the securities will be checked for eligibility against Norges Bank's collateral for loans system. For securities included on the list of eligible securities, the pledgor's credit limit will be immediately increased. Securities not already included on the list will generate an automatic approval process in the collateral for loans system. If the security is approved, the pledgor's credit limit will be increased shortly thereafter. Some categories of securities, and if indicated by automated checks of ISIN data, will also be processed manually. The pledgor is responsible for ensuring that the securities it pledges as collateral comply with Norges Bank's rules for collateralisation. Processing times will vary for securities requiring manual processing. The pledgor bank or central counterparty may also be required to submit further documentation before final approval of a security can be granted. If a new security pledged as collateral is not approved, the pledgor must release the collateral by submitting an order to this effect. See procedures under the respective central securities depositories below.

Registration at central securities depositories (CSDs)

Securities must be registered at the Norwegian Central Securities Depository (VPS), Euroclear Bank (Belgium) or Clearstream Banking (Luxembourg). Banks or central counterparties wishing to pledge securities registered at one of the above foreign CSDs must complete Part D Loan at Norges Bank of “Form for Account Management at Norges Bank” and submit the form. If the pledgor wishes to use a foreign CSD the account holder must enter into special agreements with Norges Bank and the CSD.

Approved countries of issuance

Norges Bank accepts bonds and short-term paper from Norwegian and foreign issuers within the EEA area. In addition, the following countries are approved:

• Australia
• New Zealand
• US
• Canada
• UK
• Switzerland
• Guernsey
• Jersey
• Cayman Islands

Approved currencies are listed in the guidelines.

Securities registered as collateral with VPS

Norges Bank will be account operator, and the VPS account must be pledged in its entirety in favour of Norges Bank.

Collateral registered with VPS must be denominated in NOK.

Norges Bank's systems are designed for real-time pledging with immediate updating of the pledgor's credit limit. For VPS-registered securities, pledged collateral must be delivered directly between accounts with Norges Bank as account operator. With real-time pledging of already approved ISINs and new ISINs approved in the automatic approval process at Norges Bank, the credit limit will be immediately updated.

Processing times for mutual fund units pledged as collateral with VPS may be longer than for other securities. Mutual fund units pledged as collateral must be released manually in VPS by Norges Bank.

When releasing collateral held by VPS, the pledgor must follow the procedure “Electronic request for release” in VPS Investor Services. A pledgor wishing to send an electronic request for release of collateral from the VPS must have enquiry access to the collateral account. Norges Bank can assign enquiry access to all fully pledged accounts pledged in favour of Norges Bank. Requests for enquiry access, including the account number and the pledgor’s register number in VPS (5 digits), should be sent to SIL2@norges-bank.no. Pledgees may use an administrator or agent that is authorised to act on the pledgor’s behalf. Pledgees who do not have the necessary authorisation in VPS to send a request for a release must use an agent who has such authorisation.

Collateral registered with Euroclear Bank

Collateral is pledged and released by the bank or central counterparty pledging securities on the pledge account, by submitting an instruction to transfer to/from the collateral account with Euroclear Bank. The instruction must be "free of payment" and it must be to/from an account in Euroclear Bank that the pledgor has given to Norges Bank as a standard "normal" account in Euroclear Bank. Norges Bank will receive a SWIFT message from Euroclear Bank to approve and match the instruction to Euroclear Bank. For instructions to release the collateral the following day or at a later date, the "settlement date" field should be used to indicate when the transaction should be conducted. Pledgees using an agent (indirect account) should take into account that there may be a delay before the instruction reaches Euroclear Bank.

Settlement discipline regime under the CSDR (CSDR)

The pledgor must submit a request to Norges Bank to register or release securities pledged as collateral held by Euroclear Bank by 3:30 pm (cf the operation schedule for Norges Bank’s settlement system). Requests received after the deadline on a settlement day or request with a backdated settlement date will be automatically rejected. In such cases, the pledgor must cancel corresponding instructions registered in Euroclear Bank. For pledges or releases of securities that have not been transferred in the central securities depository by the deadline, the pledgor must also notify Norges Bank by telephone (+47 22 31 66 60) and e-mail (SIL@norges-bank.no). The pledgor must also ensure that such requests to the CSD have been cancelled.

Cash penalty for fails under the settlement discipline regime

If Norges Bank is charged a cash penalty owing to the circumstances of the pledgor, including actions by the pledgor in contravention of the provisions in last paragraph, Norges Bank will debit the pledgee’s account in the amount of the penalty in question. 

Maturity and instalment

For securities pledged as collateral and held by Euroclear Bank, the pledgor shall request release of the pledged securities no later than on the settlement day before the day of maturity. In the event of instalment or redemption of a security (ISIN), this provision applies correspondingly for the entire pledged holdings of the security in question.

Instructions for release of cash proceeds from redemptions and maturities should be sent to Norges Bank using SWIFT message MT599.

Collateral registered with Clearstream Banking

Collateral is pledged by transferring the security to the collateral account with Clearstream Banking. Norges Bank will receive a confirmation of the transfer via a SWIFT message from Clearstream Banking. Requests for release of collateral held by a bank in Clearstream Banking, on the other hand, must be sent from the pledgor to Norges Bank by a specified SWIFT message as previously agreed. For instructions to release the collateral at a later date, both “the trade date” and “the settlement date” fields should be used to indicate the date of execution.

Settlement discipline regime under the CSDR (CSDR)

The pledgor must submit a request to Norges Bank to register or release securities pledged as collateral held by Clearstream Banking by 3:30 pm (cf. the operation schedule for Norges Bank’s settlement system). Requests received after the deadline on a settlement day or request with a backdated settlement date will be automatically rejected. In such cases, the pledgor must cancel corresponding instructions registered in Clearstream Banking. For pledges or releases of securities that have not been transferred in the central securities depository by the deadline, the pledgor must also notify Norges Bank by telephone (+47 22 31 66 60) and e-mail (SIL@norges-bank.no). The pledgor must also ensure that such requests to the CSD have been cancelled.

Cash penalty for fails under the settlement discipline regime

If Norges Bank is charged a cash penalty owing to the circumstances of the pledgor, including actions by the pledgor in contravention of the provisions in last paragraph, Norges Bank will debit the pledgee’s account in the amount of the penalty in question. 

Maturity and instalment

For securities pledged as collateral and held by Clearstream Banking, the pledgor shall request release of the pledged securities no later than on the settlement day before the day of maturity. In the event of instalment or redemption of a security (ISIN), this provision applies correspondingly for the entire pledged holdings of the security in question.

Manual release (backup solution)

If owing to a system disruption, the pledgor or administrator does not have the facilities to send electronic instructions for release, the release may be conducted manually at Norges Bank, but processing times must be expected to be longer. SWIFT MT599 should be used if possible. Instructions by email with test keys may be used as a backup solution in the event of a system failure. A request for the release of collateral that requires manual operations must be received by Norges Bank by 12 noon to ensure same-day execution.

Payment at maturity and on withdrawal of securities registered with VPS

Banks or central counterparties that have pledged securities registered with VPS must specify the account number to which payments related to interest, maturities and withdrawals are to be made. The settlement amount will be credited to the bank's account with Norges Bank on the due date.

Write-down of loan value day before maturity

Loan values of securities pledged as collateral are written down when Norges Bank's settlement system starts up on the day before maturity or withdrawal. If the pledgor has insufficient funds to meet its obligations, including deposits, cash settlements will be held back. Banks are responsible for ensuring that bonds and short-term paper are not pledged at such time. Breaches of this provision are subject to a fine as specified in the current prices and fees for Norges Banks’s settlement system.

Calculation of loan value and choice of market price

The loan value of a security is established on the basis of a "market price" × exchange rate × (minus 1 haircut). In selecting a market price, quoted prices are assigned a priority and a period of validity. Norges Bank may receive the following quoted prices for a single ISIN.

TYPE OF PRICE	VALIDITY	PRIORITY
Trading price delivered by VPS	21 days	1
Trading price from Interactive Data	21 days	1
Synthetic price from Interactive Data	21 days	1
Calculated price from Nordic Bond Pricing	21 days
Calculated price for ISIN in NOK from Norges Bank's collateral for loans system		2
Price set as nominal price with deduction of extra haircut		3

 When selecting a price, the lowest of the priority-1 prices is selected first. If there is only one valid priority-1 price, priority-2 prices will be included in the selection of the lowest price. Priority-3 prices will only be included if there are no other alternatives.

Norges Bank usually receives "clean prices", which are recalculated into "dirty prices", ie including accrued interest before payment. An ISIN will be quoted at its "clean price" one day before coupon date and on the coupon date. This may also be the case in other periods if Norges Bank has not received sufficient information from financial information providers to calculate accrued interest before payment.

Calculation of theoretical price

The system calculates a theoretical price based on the estimated net present value of the cash flow over the lifetime of the loan. Norges Bank uses benchmark rates that correspond to the interest rate sensitivity and maturity of the security. As individual benchmark rates for each ISIN are not used, the price takes limited account of the security's credit or liquidity risk. If the information on payment amounts, coupons or other static data is insufficient, the calculation may fail. A calculated price will then be set based on the redemption price at maturity with a deduction of 5 percent.