Ratios specific to Sociétés de crédit foncier (SCF)

Overcollateralisations

Regulatory overcollateralisation

Article L.513-12 requires that total SCF eligible assets always exceed the total amount of liabilities secured with a privileged claim. One of the Specific controller’s duties is to monitor compliance with this overcollateralization rule.
In addition to this regulatory safeguard, Compagnie de Financement Foncier also maintains a minimum level of overcollateralisation which is superior to the 105% required.
Compagnie de Financement Foncier permanently monitors its regulatory overcollateralization ratio to ensure that its assets are sufficient to fully cover all of its obligations foncières and that it goes beyond the legislative required.

Overcollateralisation since 1999

Economic overcollateralisation

This is the minimum legal requirement, under which some assets may be weighted less than 105%, is the first level of overcollateralization. Compagnie de Financement Foncier goes further and decided to cover its risks and maintains in any event a volume of non-privileged liabilities at least equal to 5% of the liabilities that benefit from the privilege.

Compliance with this additional overcollateralisation rule provides extra-security for investors in the company’s privileged debt. Compagnie de Financement Foncier thus requires overcollateralization above the minimum required ratio, and has adopted rules to minimize the following risks:

• credit and counterparty risk;
• interest rate risk; by systematically hedging variable-rate assets and liabilities;
• liquidity risk: by maintaining enough cash to meet 6 months of privileged debt obligations in a runoff scenario.

Compliance with these commitments is reported to credit rating agencies quarterly.

Compagnie de Financement Foncier engaged to maintain a particularly high and sustainable overcollateralisation ratio, at two levels:

Loan-to-value ratio

The loan-to-value ratio on residential mortgage loans (€25.9bn as of December 31, 2023), the portion financed by privileged liabilities corresponds to the ratio between the outstanding capital of the debt and the value of the property provided as guarantee (LTV – loan to value). The value of the pledge is updated annually, which makes it possible to assess the evolution of this portion. To guarantee a minimum level of credit quality of the cover pool assets, the CRBF limits the maximum percentage of portions refinancing through guaranteed bond issues.

The annual valuation of underlying assets is based on a prudent assessment of the property’s long-term characteristics, local market conditions, the current use of the property and other possible uses. All of this information is provided by BPCE Expertises immobilières. It is a Group BPCE’s wholly-owned, Veritas certified subsidiary. Their experts are certified by a court or qualified as chartered surveyors (MRICS). The Specific Controller audits these appraisals each year to verify compliance with the real-estate market parameters used in the valuation process, as described in the risk report section of the Registration Document.

Regulatory ratios