Note 6

Liquidity risk is the risk that Møre Boligkreditt AS will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or other financial assets.

The Board of Møre Boligkreditt AS annually sets limits for management of liquidity risk in the company.

Pursuant to the Financial Institutions Act, a mortgage company which issues covered bonds must ensure that the cash flow from the cover pool enables the company to meet its payment obligations to holders of covered bonds and counterparties to derivative agreements at all times.

The loans acquired by Møre Boligkreditt AS are primarily financed through the issuing of covered bonds. The company's plan is to ensure that this type of funding shall over time account for a minimum of 80 per cent of the entity's financing of acquired loans.

Loans that are acquired and not included in a portfolio financed by covered bonds, and loans that serve as over-collateralisation, are financed through a facility the company holds in the parent bank, Sparebanken Møre, or equity. The long-term overdraft facility in Sparebanken Møre has a total limit of NOK 2.25 billion. Undrawn facility amounts to NOK 1.11 billion as of 31.12.

Receivables from credit institutions and investments in covered bonds, not used for LCR purposes, are used as part of the cover pool.

The requirement for liquidity coverage ratio for Norwegian covered bond companies was implemented 30.06.16 with 70 %. As of 31.12.16 the requirement is 80 %. Møre Boligkreditt AS reports 119 % as at 31.12.16.