The Verband Deutscher Hypothekenbanken (Association of German Mortgage Banks – VDH) won plaudits last month when it said it was in favour of tapping jumbo Pfandbriefe to make sure they remained liquid. The market was impressed that one body could speak quickly and unequivocally on behalf of a large group of issuers. "It's remarkable that they've come up with a joint statement arguing the case to tap," says a banker in Frankfurt.
The VDH doesn't speak for all Pfandbrief issuers, of course. Depfa Bank is one absentee, having pulled out because it is a public sector lender, not a mortgage lender. But with the VDH's remit widening now that any bank can issue Pfandbriefe, could it be time for Depfa to ask for readmission? Depfa's position is that it might consider rejoining. Gossip in Germany is that it will.
Depfa has nothing to lose. The VDH is a driving force behind the European Covered Bond Council. Both Depfa and the VDH are ECBC members. As another Pfandbrief issuer says: "If you're in the business of covered bonds, you want representation in the ECBC." Depfa might like to consider itself an agency, but its main funding product is still shaped by policies that are in turn influenced by the VDH and the ECBC.