Real estate survey 2014: Pfandbriefe looks for new lease of life from savings banks

David Wigan

The increasing role of Sparkassen – Germany’s ubiquitous savings banks – in real estate lending could boost Pfandbrief issuance, which has been steadily declining despite mortgage volumes surging to a 16-year high, analysts say.

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In the last couple of years, mortgage Pfandbriefe issuance has been gaining a larger share of the Pfandbrief pie, which has shrunk from €221.5 billion in 2003 to just €49.5 billion last year, Association of German Pfandbrief Banks data show.

However, rule changes by the German financial regulator BaFin, requiring matching liabilities in line with global regulatory capital reform, could prompt significant numbers of the country’s 400-plus deposit taking banks to begin issuing mortgage Pfandbriefe.

"BaFin wants to make sure an offer comes from ratings agencies by ensuring there’s more matching of assets and liabilities, because they’re concerned about banks...