The Pfandbrief 2011 | 2012

The Pfandbrief 2011 | 2012
Facts and Figures about Europe’s Covered Bond Benchmark

Member Institutions of the vdp

The Association of German Pfandbrief Banks (vdp) currently represents
39 members. As the representative of its member institutions the vdp looks
after the interests of the Pfandbrief Banks vis-à-vis national and European
decision-making bodies as well as a broad professional public. Moreover, the
vdp in its capacity as the umbrella organization of the German Pfandbrief
Banks supports its members with highly specialized business solutions.
The expertise of the vdp is tailored to the specific requirements of Pfandbrief
Banks – the Pfandbrief and generation of eligible assets as cover. The vdp
promotes the economic concerns of its member institutions focusing on
lobbying activities in capital market and tax policy as well as in all other
political areas relevant to Pfandbrief issuing activity. In addition, it assists
its member institutions in regulatory issues and represents them vis-à-vis
the national supervisory bodies. Information and experience from member
institutions are exchanged, prepared and developed into market standards in
the Association’s bodies within the scope of group governance. In addition,
the vdp provides its members with business solutions that benefit the specific
lending and issuing business conducted by Pfandbrief Banks. The business
activities of the vdp members profit from the vdp’s recognized expertise, its
extensive network and well-established communications instruments.

Content
The Pfandbrief – Background Information
4 Preface
Jan Bettink | President of the Association of German Pfandbrief Banks
6 The Legal Framework for Issuing Pfandbriefe
Jens Tolckmitt, Dr. Otmar Stöcker | Association of German Pfandbrief Banks
20 The Pfandbrief Market 2010/2011
Swen Prilla, Christian Walburg | Association of German Pfandbrief Banks
2
28 Effects of Basel III on the Pfandbrief-based lending business
Dirk Auerbach | KPMG AG
36 Quo vadis? The regulatory treatment of Pfandbriefe under Solvency II
Mathias Christoph Köhne | Gothaer Finanzholding AG
44 Pfandbriefe in Securities Indices – Current Trends and Applications
Franz Rudolf, Florian Hillenbrand | Unicredit Bank AG
56 Roundtable Pfandbrief Banks
hosted by Michael Schulz | NORD/LB
64 The German Property Market – Guaranteeing the Sustained Value
of Mortgage Pfandbriefe
Susanne Giesemann, Christoph Kettel | Eurohypo AG
74 Regulation of rating agencies: Time for new priorities?
Sascha Kullig | Association of German Pfandbrief Banks,
Horst Bertram | BayernLB

Member Institutions of vdp
84 Aareal Bank | Wiesbaden
86 BayernLB | Munich
88 Berlin-Hannoversche Hypothekenbank | Berlin
90 Bremer Landesbank | Bremen
92 COREALCREDIT BANK | Frankfurt am Main
94 DekaBank | Frankfurt am Main
96 Deutsche Apotheker- und Ärztebank | Düsseldorf
98 Deutsche Genossenschafts-Hypothekenbank | Hamburg
100 Deutsche Hypothekenbank | Hanover
102 Deutsche Kreditbank | Berlin
104 Deutsche Pfandbriefbank | Unterschleißheim
106 Deutsche Postbank | Bonn
108 Deutsche Schiffsbank | Bremen
110 Dexia Kommunalbank | Berlin
112 Düsseldorfer Hypothekenbank | Düsseldorf
114 DVB Bank | Frankfurt am Main
116 Eurohypo | Eschborn
118 Hamburger Sparkasse | Hamburg
120 HSH Nordbank | Hamburg
122 ING-DiBa | Frankfurt am Main
124 Kreissparkasse Köln | Cologne
126 Landesbank Baden-Württemberg | Stuttgart
128 Landesbank Berlin | Berlin
130 Landesbank Hessen-Thüringen (Helaba) | Frankfurt am Main
132 M. M. Warburg & CO Hypothekenbank | Hamburg
134 Münchener Hypothekenbank | Munich
136 Nord/LB Norddeutsche Landesbank Girozentrale | Hanover
138 SaarLB Landesbank Saar | Saarbrücken
140 SEB | Frankfurt am Main
142 Sparkasse KölnBonn | Cologne
144 UniCredit Bank HypoVereinsbank | Munich
146 Valovis Bank | Essen
148 Westdeutsche ImmobilienBank | Mainz
150 WestLB | Düsseldorf
152 WL BANK Westfälische Landschaft Bodenkreditbank | Münster
154 Wüstenrot Bank Pfandbriefbank | Ludwigsburg
156 Commerzbank | Frankfurt am Main
157 IKB Deutsche Industriebank | Düsseldorf
158 Santander Consumer Bank | Mönchengladbach
3
Further Information
159 Other Pfandbrief Issuers
160 The Methodologies of the Rating Agencies
163 Topics covered in 1996 – 2010

Preface
Dear Reader,
4
For over a year now, the eurozone debt crisis has dominated the sentiment on the global
capital market. The Pfandbrief has held up well in this difficult environment, just as it
had previously done during the bank crisis. Its importance as a safe haven for investment
capital remains undisputed. Investors appreciate the safety of the Pfandbrief, its
liquidity and transparency – especially in difficult times. Policymakers and regulators,
too, are aware of the stabilizing effect of the Pfandbrief on the financial system as a
whole, and take this into account in the forthcoming regulatory environment. The number
of issuers is rising, and the concept of high-quality covered bank bonds continues to
spread both in the eurozone and further afield. Relevant parliamentary bills in the USA,
Canada, Australia and New Zealand are evidence that banks are increasingly resorting to
secured refinancing.
All things considered, therefore, the Pfandbrief showed itself in a very positive light
as at mid-2011. Yet there is no reason for complacency: the challenges which the banking
industry will have to overcome in the years ahead are too demanding and multifaceted
for that. Refinancing in particular is becoming the central strategic challenge
facing the banking sector given the proposals for new capital rules for banks and insurers,
known as Basel III and Solvency II. This is true primarily of unsecured funding. For
example, under the Basel III liquidity rules, senior unsecured debt issued by banks is
to be treated less favorable than corporate bonds. Nor will the Pfandbrief remain unaffected.
Although the regulatory initiatives recognize the high quality of the Pfandbrief in
principle, the proposed new capital rules for banks fail to give appropriate consideration
to low-risk cover pool eligible lending activities.
One thing is certain: Basel III and Solvency II will change the German banking landscape.
It remains to be seen whether the changes that are initiated will move in the
direction policymakers and regulators would like to see. One reason for this is, without
doubt, that the analysis of the cumulative effect of all the planned regulatory initiatives
has so far been wholly insufficient. An efficient regulation which seeks to enhance the
stability of the financial system should not be allowed to put products such as Pfandbriefe,
which can contribute towards such stabilization, at a disadvantage. Instead, it
should offer incentives to use them.
Pfandbrief Banks ought to be able to continue to rely on their highly efficient and
especially favorable refinancing instrument. It is therefore crucial that regulators and
policymakers make the necessary adjustments when shaping the European supervisory

Jan Bettink | president
framework in future, to ensure that the Pfandbrief and Pfandbrief-based business
are regulated with sound judgment and for the good of financial market stability.
In light of the ongoing discussions, regulatory aspects are one of the main focuses
of this issue of the Pfandbrief Fact Book, featuring in no less than three articles.
Following a detailed analysis of the implications of Basel III for Pfandbrief-based
business, an article on Solvency II examines – with regard to the Pfandbrief – the
specific impact of the new capital regime on insurers. A further article looks at rating
agencies and how they are regulated. From the viewpoint of Pfandbrief issuers, the
transparency and communication of the agencies are in particular need of improvement
– an issue which should be addressed in an amendment of the relevant EU
directive.
The representation of Pfandbriefe in securities indices is the subject of another
article in this publication. After taking an in-depth look at individual indices, the
authors conclude with thoughts on exchange traded funds (ETFs) of Pfandbriefe.
The issuers’ round-table presents a format not seen in previous editions of the
Fact Book, giving experts from several Pfandbrief Banks an opportunity to state
their views on a wide range of questions which their banks currently face.
Accounting for a share of just under 80%, German real estate assets constitute
the greater part of Pfandbrief Banks’ cover pools for Mortgage Pfandbriefe – reason
enough for us to dedicate one article to recent developments in, and the prospects
for, individual segments of Germany’s real estate market. The special importance
of the mortgage lending value to the stability of the real estate market in Germany
is also highlighted.
Dear reader, we hope that the topics we have chosen meet with your interest
and make for stimulating reading. My thanks go to all the authors for the work and
the time they have put towards this, the 16th edition of the Pfandbrief Fact Book.
5
Jan Bettink
President of the Association of German Pfandbrief Banks

The Legal Framework
for Issuing Pfandbriefe
Jens Tolckmitt, Dr. Otmar Stöcker | Association of German Pfandbrief Banks
6

Pfandbriefe are covered interest-bearing bonds. They are issued by
credit institutions with a license to engage in Pfandbrief business (Pfandbrief
Banks) and placed on the capital market. These credit institutions
use them to fund certain loans that are secured by real estate liens, ship
mortgages, aircraft mortgages and claims against public-sector bodies.
Depending on the type of collateralization, these bonds are referred
to as Mortgage Pfandbriefe, Ship Pfandbriefe, Aircraft Pfandbriefe or
Public Pfandbriefe respectively. Most Pfandbriefe are issued in the
form of bearer bonds, followed by registered bonds.
Structure of a Pfandbrief Bank
General supervision based on the German Banking Act (KWG)
Other banking activities
not eligible as cover
Other funding
7
Special supervision of Pfandbrief Banks
on the basis of the Pfandbrief Act (PfandBG)
Mortgage loans
– commercial
– residential
60 % of
the mortgage
lending value
Mortgage Pfandbrief
KWG
Public-sector loans
100 %
of the loans
Public Pfandbrief
KWG
Ship finance
60 % of
the mortgage
lending value
Ship Pfandbrief
PfandBG
Aircraft finance
60 % of
the mortgage
lending value
Cover pool monitor audits cover assets
Aircraft Pfandbrief
PfandBG
The Pfandbrief Bank grants property finance, ship loans, aircraft loans and public-sector loans. These
assets are reported in the credit institution's balance sheet. The cover pool monitor enters loans or parts
of loans that are eligible as cover under the Pfandbrief Act into the respective cover register – together
with the collateral for them – which the cover pool monitor watches over. A separate register is maintained
for each loan type. In their entirety, the cover assets entered in one cover register are referred to
as the cover pool. Pfandbriefe are issued on the basis of the cover pools. The Pfandbrief Bank undertakes
to pay the Pfandbrief bearers the promised interest and, at maturity, to repay the principal amount of the
Pfandbrief. In the event of the Pfandbrief Bank's insolvency, the Pfandbrief bearers have a preferential
claim in respect of the assets entered in the cover registers. The cover pools and the Pfandbriefe are not
included in the insolvency proceedings under the insolvency administrator, but are managed separately
by the cover pool administrator.

The Legal Framework for Issuing Pfandbriefe
The legal basis for issuing Pfandbriefe is the Pfandbrief Act (Pfandbriefgesetz, PfandBG), the
purpose of which is to ensure the Pfandbrief’s high standard of safety. On the one hand, this
piece of legislation serves to satisfy the demand by certain circles of investors for a secure
investment. On the other, thanks to the low risk premiums to be paid, Pfandbriefe provide
issuers with a very cheap and reliable source of funding. This in turn enables the issuers to
supply the credit market with loans on a continuous basis at prices that take their bearings
from the capital market.
The high standard of safety the Pfandbrief offers is owed to the provisions of the Pfandbrief
Act and to the regulations issued in connection with the Pfandbrief Act, the main elements
of which are as follows.
Supervision
8
Granting the License
Pfandbrief business, which is to say the issuing of covered bonds on the basis of real estate
mortgages, ship mortgages and aircraft mortgages as well as claims acquired against the public
sector, is a line of banking business. To be awarded a license to engage in Pfandbrief business,
a credit institution must fulfill special requirements. For example, it must have core capital
of at least € 25 million and be licensed to conduct lending operations within the meaning
of the German Banking Law (Kreditwesengesetz, KWG). Moreover, the credit institution must
have at its disposal suitable procedures and instruments for managing the risk entailed in
the cover pools on the one hand and its issuing operations on the other,
prove that it intends to engage in Pfandbrief business on a regular and sustained basis,
and
put the appropriate organizational structure and resources into place.
In stipulating these special conditions for the granting of a license, legislators seek to ensure
that each credit institution conducts its Pfandbrief business seriously and in a sustained manner
by linking the assumption of Pfandbrief business with substantial effort on the bank’s part.
This is intended to make it more difficult to engage in opportunistic, short-term business strategies.
Because a Pfandbrief Bank needs a separate license for each of the Pfandbrief categories,
it must prove it has the requisite expertise in the various operations eligible as Pfandbrief
cover.
Under the 2010 amendment, a highly significant new provision was included in § 2 par. 4
of the Pfandbrief Act, whereby the Pfandbrief Bank is to retain its banking license in respect of
the cover pools, even if it is revoked for the remainder of the bank (for further details, see the
section “Separation Principle in the Event of the Pfandbrief Bank’s Insolvency”, p. 16 ff.).
Permanent Supervision and Cover Audits
In addition to general banking supervision, a Pfandbrief Bank is subject to a special form of
supervision by the Federal Financial Supervisory Authority (BaFin), the aim of which is to
monitor observance of the Pfandbrief Act and the regulations issued in connection with it. The
permanent supervision is conducted by the department at BaFin responsible for the respective
credit institution. The prerequisite for the Pfandbrief market to function effectively is the
highest and the most uniform standard of safety possible, across all issuers. For this reason,

the special supervision of Pfandbrief Banks must be conducted according to uniform principles.
The “Pfandbrief Competence Center I – Basic Issues” was set up at BaFin to ensure the
uniform application and interpretation of the Pfandbrief Act. Besides the ongoing supervision,
a further feature is the cover audits, which are performed at regular intervals of, usually, two
years. Their purpose is to examine the cover pool assets by way of random checks, and they
are conducted or monitored by “Pfandbrief Competence Center II – Cover Audits” at BaFin to
make sure that uniform standards and requirements are complied with.
Cover Pool Monitor
Cover pool monitors are to be appointed at every Pfandbrief Bank. Their task is to see to it
that the statutory cover for the Pfandbriefe is given and that the cover assets are duly entered
in the respective cover register. Appointed by BaFin, cover pool monitors are not answerable
to the bank, the supervisory authority or the Pfandbrief creditors. The function they perform
is shaped solely by law. BaFin may revoke the appointment for an objective reason. Thus, the
cover pool monitor may be regarded as an independent monitoring body.
Under the 2010 Pfandbrief Act amendment the liability of the cover pool monitor was
restricted, in the event of gross negligence, which cannot be precluded or limited by way of
a contract, to € 1 million (§ 7 par. 5 sentences 2 and 3 Pfandbrief Act. For the first time, this
enables the cover pool monitor to take out insurance in respect of his duties.
Quality of the Cover Assets
9
Not all the loans a Pfandbrief Bank extends are eligible as cover for Pfandbriefe. The Pfandbrief
Act expressly stipulates which loans and other claims may serve as cover assets. In this
context a distinction is, as a rule, made between the individual Pfandbrief types.
Mortgages as Cover Assets
Only mortgages that meet certain requirements may be used as cover for Mortgage Pfandbriefe.
Land charges and foreign security interests that offer comparable security rank equal
with mortgages.
The property charges may encumber landed property or equivalent titles to land in Germany,
in the Member States of the European Union or another Contracting State to the Agreement
on the European Economic Area (EEA), in Switzerland, in the USA, in Canada or in
Japan. Both commercial and residential properties may be lent against. Also eligible as cover
for Pfandbriefe are assets which other credit institutions hold for the Pfandbrief Bank on a
fiduciary basis, provided the Pfandbrief Bank is entitled to the separation of these assets from
the trustee’s assets in the event of the latter’s insolvency. In order to support securitization and
Pfandbrief business, rules were created in 2005 with the Funding Register Law (Refinanzierungsregisterverordnung)
under the German Banking Act which ensure the insolvency remoteness
of land charges held on a fiduciary basis.
For the Pfandbrief Banks’ cross-border business that is eligible as cover, moreover, the
share of the loans in respect of which the preferential right in insolvency is not ensured must
not exceed 10% of the mortgage cover assets. The EU Member States are not included in the
Pfandbrief Bank’s cross-border business in this context, as the preferential right in the case
of insolvency is ensured by statutory provisions at EU level.

The Legal Framework for Issuing Pfandbriefe
Mortgage lending value vs. market value
Value
Market value
Mortgage lending value
60% mortgage lending limit
10
Time
Conservative valuation of real estate
The mortgage lending value (MLV) is determined according to detailed statutory provisions
Based on permanent features of the property
Market value is the upper limit for the MLV
Occasion-related review of the MLV
Claims up to 60% of the MLV are eligible as cover
One of the central pillars of the safety of the Mortgage Pfandbrief is that property financings
may be included in cover only up to the mortgage lending limit of 60% of the mortgage lending
value (MLV). The way in which the MLV is to be determined, and the requirements in
respect of the valuer’s qualifications and the valuer’s independence vis-à-vis the Pfandbrief
Bank are regulated in detail by the Pfandbrief Act and the Regulation on the Determination
of the Mortgage Lending Value (BelWertV). The MLV reflects only the long-term, sustainable
aspects of a property, meaning that speculative aspects are disregarded. The aim here is that
the MLV, unlike the market value, shows as little in the way of fluctuation as possible. The
MLV must not exceed, and indeed is usually lower than, the market value. However, the
difference between the two values does not remain constant, for which reason it is not possible
to make a simple value deduction. Instead, the difference is determined by the expectations
of the market with respect to the future price development of the property in question.
Yet the mortgage lending limit of 60% of the MLV does not mean that a loan, to be eligible as
cover, may only be equivalent to this 60% limit. Only the part of the loan that serves as cover
may not exceed this limit. This can be achieved by dividing the loan into two parts – one up
to the 60% limit and the other above it. However, this is not necessary in practice as an ideal
division is possible and is applied in most cases.
Finally, the properties lent against must be insured against the risks relevant to the location
and type of property concerned.

Claims against Public-Sector Entities as Cover Assets
Under § 20 Pfandbrief Act, money claims resulting from the granting of loans, from bonds or
from a comparable legal transaction may serve as cover for Public Pfandbriefe. In particular,
debtors in this respect may be
EU Member States, Contracting States to the Agreement on the EEA and their sub-sovereign
bodies (local authorities and regional governments)
the so-called third states (Switzerland, Japan, Canada and USA) and their sub-sovereign
bodies, provided they are assigned to credit quality step 1;
German public-sector authorities for which state support (“Anstaltslast”) or a legally
founded obligation (“Gewährträgerhaftung”) or a state refinancing guarantee has been
given, or which are legally entitled to raise fees, rates and other levies;
so-called public-sector entities of an EU or EEA Member State; public-sector entities of a
third state provided they are assigned to credit quality step 1;
export credit agencies domiciled in an EU/EEA Member State provided the agency meets
the requirements to be fulfilled by a “public-sector entity” as defined in Art. 4 (18) of the
EU Banking Directive 2006/48/EC;
the European Central Bank as well as multilateral development banks and international
organizations within the meaning of the EU Banking Directive (quality step 1 required);
the central banks of the above EU Member States which meet cover eligibility criteria as
well as – to a limited extent – suitable credit institutions of credit quality step 1 which are
domiciled in a state which meets cover eligibility criteria in accordance with § 20 Pfandbrief
Act.
11
Under the rules set forth in the EU Banking Directive (2006/48/EC), credit quality step 1 is the
highest quality category with regard to capital adequacy; this in turn has an effect on the favorable
weighting given to the Pfandbrief.
As from July 2005, claims against public-sector credit institutions for which no legally
founded obligation or only modified state support exists are no longer eligible as cover. In
particular, this concerns savings banks and Landesbanken. However, they may be included in
cover to a limited extent as claims against credit institutions. Claims against the above debtors
remain eligible as cover if, under the agreement between the German Federal Government and
the European Commission of March 22, 2002, they continue to be state-guaranteed (grandfathering).
Also in the case of claims against public-sector bodies, as with mortgage claims, the 10%
limit applies to claims against debtors from third states in which the Pfandbrief creditors’ preferential
right in insolvency is not ensured.

The Legal Framework for Issuing Pfandbriefe
Ship Mortgages as Cover Assets
Certain ship mortgages may be included in cover for Ship Pfandbriefe (§ 21 Pfandbrief Act).
The ships and ships under construction that are lent against must be recorded in a public
register. The ships must not be more than 20 years old. Loans against ships, like loans against
properties, may be included in cover only up to the equivalent of 60% of the ship’s MLV. The
MLV, which is also a permanent value, must be determined according to the principles of the
Regulation on the Determination of the Mortgage Lending Values of Ships and Ships under
Construction (“Schiffsbeleihungswertermittlungsverordnung”). Special requirements apply
to the eligibility of ship mortgages as cover, such as maximum lives for ship mortgages. The
share of loans outside the EU in the case of which the preferential right in insolvency is not
ensured may not exceed 20% for Ship Pfandbriefe. This takes into consideration the fact that
ships are often registered abroad, and a 10% limit would unreasonably restrict the use of the
Pfandbrief for credit institutions – and with that, their competitiveness.
12
Aircraft Pfandbriefe
The introduction of § 26a-26f under the 2009 amendment of the Pfandbrief Act is an important
new aspect for business qualifying as cover for Pfandbriefe in that loan receivables
secured by aircraft mortgages are eligible as cover for a new Pfandbrief category, the “Aircraft
Pfandbrief”. As is the case with Mortgage Pfandbriefe, Public Pfandbriefe and Ship Pfandbriefe,
a separate cover pool is set up for Aircraft Pfandbriefe. As a security interest, the registered
lien in respect of an aircraft is of the same high quality and level of reliability as the ship
mortgage. The secondary markets for aircraft are liquid and efficient, so that the realization of
aircraft is assured. Modeled closely on the rules governing cover assets for Ship Pfandbriefe,
the law sets stringent standards both with regard to the collateralization of the loans and to
the valuation of the individual aircraft. Thus, the Aircraft Pfandbrief, too, offers the same high
level of protection afforded German Pfandbrief creditors.
Claims against Credit Institutions
Claims against suitable credit institutions may serve as further cover assets for all four Pfandbrief
types. This serves the purpose of enhancing the cover pool liquidity. The cover pools
are made up of a large number of assets with different lives, interest rates and currencies.
The lives, coupons and currencies of the Pfandbriefe cannot match exactly those of the cover
pools. Usually, for example, Pfandbrief issues are of a greater volume than the underlying
assets. To balance out these mismatchings it is necessary to be able to include liquid and flexible
assets such as claims against credit institutions in the cover pools. Since the basic features
of the cover pools should not, however, be changed, claims against credit institutions may
account for only up to 10% of the total volume of each Pfandbrief type. Furthermore, claims
against one credit institution are limited to 2% of the Pfandbriefe.
The 2009 amendment brought with it a change to § 4 par. 1 sent. 2 no. 3 Pfandbrief Act in
that the credit quality step 1 was introduced for claims against credit institutions as a qualityenhancing
criterion. Further, the eligibility as cover of such claims against credit institutions
is restricted to credit institutions in countries which generally speaking belong to the circle
of eligible countries. It was made clear, moreover, that loans with a subordination agreement

are not eligible as cover. These restrictions apply through the provisions set forth in § 19 par. 1
no. 2, § 20 par. 2 no. 2, § 26 par. 1 no. 3 and § 26f par. 1 no. 3 Pfandbrief Act to all Pfandbrief
types, as these provisions refer in this context to § 4 par. 1 sent. 2 no. 3 Pfandbrief Act.
Claims Resulting from Derivative Contracts
Subject to certain conditions, claims resulting from standardized master agreements in respect
of derivative transactions against suitable credit institutions, financial services institutions,
insurers and central counterparties at a stock exchange, at the German Federal Government
and with Federal States (“Bundesländer”) may be eligible as cover for all Pfandbrief types
(§ 19 par. 1 no. 4, § 20 par. 2 no. 3, § 26 par. 1 no. 5 and § 26f par. 1 no. 5 Pfandbrief Act).
The natural mismatch (above) between cover pools and Pfandbriefe can give rise to interest
rate and currency risks in the cover pools. These risks can be neutralized by offsetting
assets, or by derivatives (interest rate and currency swaps) concluded between the Pfandbrief
Bank and the derivative counterparty. The net present value of derivatives may change in the
short term, depending on how interest and exchange rates develop. A positive value from the
Pfandbrief Bank’s viewpoint gives rise to a claim on the part of the Pfandbrief Bank against the
counterparty. A negative value means the Pfandbrief Bank has a liability towards the derivative
counterparty which, however, is not payable until the derivative contract is terminated. Claims
and liabilities are netted against each other on a daily basis. The standardized agreements
used in practice for derivatives provide that, in the event of insolvency, either party may terminate
the contract vis-à-vis the other with immediate effect. In consequence, the derivatives
concluded under the master agreement are settled at their net present value and the resultant
claims to which the parties are entitled are offset against each other to establish the net claim.
Such a consequence would not, however, be consistent with the Pfandbrief safety concept,
under which Pfandbriefe outstanding may not become payable prematurely – even in the event
of the Pfandbrief Bank’s insolvency – but are to be satisfied out of the payment flows from
the cover assets when they mature (see “Separation Principle in the Event of the Pfandbrief
Bank’s Insolvency”, p. 16). In the event of the Pfandbrief Bank’s insolvency, if the counterparty
were able to terminate the derivatives concluded in order to hedge against interest rate and
currency risks, the cover pools would be exposed to these risks. For this reason, it is both
necessary and required by law that derivatives included in cover may not be terminated by
the counterparty if the Pfandbrief Bank becomes insolvent. To achieve this in practice, individual
agreements are concluded under a master agreement and derivatives are allocated
to the respective individual agreements. For example, if a Pfandbrief Bank issues Mortgage
Pfandbriefe and Public Pfandbriefe, three individual agreements may be concluded: one each
for the derivatives pertaining to the respective cover pool, and one which covers the remaining
assets of the Pfandbrief Bank. Netting takes place only among the derivative claims that
fall under the same individual agreement. In the event of the Pfandbrief Bank’s insolvency,
therefore, only the individual agreement concluded with the counterparty for the other assets
of the Pfandbrief Bank can be terminated. The individual agreements for the cover pools, on
the other hand, must remain in force, and could only be terminated if the respective cover pool
also became insolvent.
13

The Legal Framework for Issuing Pfandbriefe
The individual derivatives are entered in the respective cover registers. Derivatives may have
a negative value, giving rise to liabilities in respect of the cover pool. As a concession for the
fact that the counterparties have to waive their right to terminate the derivative contracts,
even if the Pfandbrief Bank becomes insolvent, their claims rank equal with those of Pfandbrief
creditors. To prevent the cover pools from becoming inordinately volatile and in order
not to undermine the principle behind the cover pools, the claim or the liability under the net
derivative position in each cover pool may not exceed – calculated in terms of the net present
value -12% both of the cover assets and of the Pfandbriefe outstanding.
Cover Register
14
The above-mentioned cover assets must be entered in cover registers (§ 5 Pfandbrief Act).
A separate register is to be maintained for each Pfandbrief type. The entry of derivatives is
subject to approval by the derivative counterparty and the cover pool monitor. This requirement
reflects the above-mentioned special aspects regarding derivatives as cover assets.
The cover registers, which may also be kept electronically, must be passed on to BaFin at
regular intervals, where they are stored.
Cover registers are, of course, highly important. All the assets recorded in one cover register
belong to the respective cover pool and are, in the event of the Pfandbrief Bank becoming
insolvent, subject to the cover pool administrator’s right of management and disposition.
Details on the maintenance of the cover registers are set forth in the Cover Register Statutory
Order (Deckungsregisterverordnung).
Active Administration of the Cover Pools to Ensure Matching Cover
The cornerstone of the safety of the Pfandbrief is the fact that the Pfandbrief creditors’ entitlement
against the Pfandbrief Bank to payment is secured by the cover pools which, in the event
of the Pfandbrief Bank’s insolvency, are to serve primarily to satisfy the Pfandbrief creditors’
claims. Thus it is essential that, should insolvency occur, the cover pools contain sufficient
cover assets to satisfy the Pfandbrief creditors’ claims punctually. This is achieved, first of all,
in that the nominal value and the net present value of the Pfandbriefe outstanding are covered
at all times by matching cover pools (§ 4 Pfandbrief Act).
The Net Present Value Regulation (Barwertverordnung) stipulates in detail how the net
present value is determined, and permits three methods for calculating the net present value.
These methods use different fictitious changes of interest rates and exchange rates which are
to be taken into account when determining the net present value. The cover pools are subjected
to defined stress scenarios, so that in effect a net present value cover surplus results.
Moreover, excess cover must be maintained in net present value terms which amounts to 2%
of the Pfandbrief liabilities to be covered, and which must be invested in particularly liquid
assets. The purpose of this mandatory overcollateralization is, in the event of the Pfandbrief
Bank’s insolvency, to cover risks that may arise as well as administrative expenses payable,

and to meet liquidity management costs. Over and above this, it is at the issuer’s discretion to
maintain further excess cover. Most rating agencies stipulate this as a precondition for awarding
top ratings to Pfandbriefe.
Unlike those for Mortgage Backed Securities, cover pools for Pfandbriefe are dynamic. This
means their composition changes over time, depending on the maturities and the assets that
are newly registered and included in cover. Loans are repaid or are removed from the cover for
other reasons, to be replaced by new loans, and new lending is included in cover to enable the
Pfandbrief Bank to issue new Pfandbriefe. Thus, the cover pools have to be actively administered
to assure matching cover at all times. The Pfandbrief Act stipulates that risk management
systems must be installed to identify, assess, control and monitor the relevant risks such as
counterparty risks, interest rate, currency and other market price risks, operational risks and
liquidity risks (§ 27 Pfandbrief Act).
§ 27 of the Pfandbrief Act covers the general handling of different risks inherent to the
cover pools. Whereas specific limits are stipulated for interest rate, currency and credit risks,
the liquidity risk had originally not been explicitly addressed. Liquidity risk is defined here as
the risk that, in the event of the Pfandbrief Bank’s insolvency, the cover pool will be unable to
provide sufficient liquidity to ensure the timely servicing of the Pfandbriefe maturing in the
months to follow, e.g. large-volume Jumbo Pfandbriefe. Rating agencies and investors saw in
the absence of a provision dealing explicitly with this possibility a weakness in the Pfandbrief
Act, occasioning rating agencies to call for excess overcollateralization to cover this liquidity
risk.
Against this background, under the 2009 amendment a new provision to limit the shortterm
liquidity risk was added (§ 4 par. 1a Pfandbrief Act). Accordingly, the maximum cumulated
liquidity need of the next 180 days 1) must be secured by assets that can be used as excess
overcollateralization, as well as other liquid cover assets. Liquid assets are considered to be all
the financial instruments entered in the cover register which the European System of Central
Banks (ESCB) has classified as being eligible for central bank credit (ECB-eligible assets). Various
limits do not apply to such assets that are entered in the cover register solely to manage
liquidity.
15
Transparency of the Cover Pools
To give investors as exact and up-to-date a picture as possible of the composition of the cover
pools and the Pfandbriefe outstanding, Pfandbrief Banks are required to publish certain
information on a quarterly basis and additional data annually. Such information includes, for
instance, the regional distribution of the cover assets, the type of properties lent against, the
debtors of public-sector liabilities and the amount of claims that are at least 90 days in arrears.
This allows Pfandbrief creditors to compare the cover pools of different Pfandbrief Banks. The
2010 amendment of the Pfandbrief Act provided for a period of one month after the end of
each quarter. The quarterly report must be published within this one-month period; this period
will be extended to two months for the fourth quarter.
1)
The draft law originally provided for a liquidity buffer of 90 days (Bundesrat printed paper 16/11130 of December 1, 2008, p. 30).
Because, during the course of the financial crisis, this was considered too short the Bundestag followed the proposal made by the
Central Credit Committee of the Leading Associations of the German Credit Industry (ZKA) and increased this reserve to 180 days.

The Legal Framework for Issuing Pfandbriefe
Separation Principle in the Event of the Pfandbrief Bank’s Insolvency
A key component of the safeguarding mechanisms enshrined in the Pfandbrief Act are the
provisions contained in § 30 ff Pfandbrief Act, which regulate what happens to the cover pools
and Pfandbriefe in the event of the issuer’s insolvency. Under this preferential right the cover
pools are at the disposal in the first instance of the Pfandbrief creditors and, under certain
circumstances, of the derivative creditors in the event of the Pfandbrief Bank becoming insolvent,
to satisfy their claims. This means that the Pfandbrief Bank’s insolvency does not affect
them. To ensure this preferential right, the Pfandbrief Act provides for an “emergency plan”
that is set forth in detail. This is also to apply if, under the German Restructuring Act, a bridge
bank is involved (§36a Pfandbrief Act).
Insolvency Privilege of Pfandbrief Holders
Insolvency
of the Issuer
Insolvency
Administrator
Creditors
16
Pfandbrief Bank
Other assets
Other Creditors
Other Assets
Cover Pool
Administrator
Mortgage
Loans
Mortgage loans
Mortgage Pfandbrief
Claims against
Public-Sector-
Debtors
Ship Mortgages
Claims against
Public-Sector-
Debtors
Ship Mortgages
Public Pfandbriefe
Ship Pfandbriefe
Each is
Pfandbrief
Bank with
limited
business
activities
Aircraft
Mortgages
Aircraft Mortgages
Aircraft Pfandbriefe
Separation principle in the event of a Pfandbrief Bank’s insolvency
no acceleration of Pfandbrief
Pfandbrief and cover assets do not fall into the insolvency estate
Pfandbrief Bank with limited business activities
Cover pool administrator manages cover assets

Ring-Fencing of the Cover Pools
The cover pools do not participate in the insolvency proceedings in respect of the bank’s
assets. They form for each Pfandbrief category issued by the credit institution a special (ringfenced)
part of the Pfandbrief Bank out of which the Pfandbrief creditors’ claims are to be
satisfied, (§ 30 par. 1 Pfandbrief Act). The bank’s insolvency administrator therefore has no
access to the cover pools and the Pfandbriefe do not accelerate. With regard to mortgage
loans, which are in part included in the cover pools and are in part outside the cover pools, the
Pfandbrief Act pro-vides that the payment flows from these loans first pass in full to the cover
pool administrator (see below). The insolvency administrator can demand that the payment
flows be separated at his expense, and that the payments in respect of the parts of the loans
above the cover limit flow to him.
Pfandbrief Bank with Limited Business Activities
One question repeatedly asked concerns the legal nature of the cover pools in the event of a
Pfandbrief bank’s insolvency. The answer sometimes given is that the cover pool is separated
from the insolvency estate for insolvency law purposes and given the term “Sondervemögen”.
This, in turn, is often misunderstood to the effect that the cover pool becomes a SPV, so that
the character of a bank (and therefore the banking license) is lost.
In 2009, the German Federal Government, during a so-called small parliamentary interpellation,
cleared up this misconception. In its reply (Bundestag printed paper 16/13823 of July
21, 2009, no. 2) the government describes the term “Sondervermögen” as unsuitable and
instead uses the expression “besonderer Teil der Pfandbriefbank” (special part of the Pfandbrief
Bank) to convey the fact that the cover assets and Pfandbriefe administered by the cover
pool administrator together constitute a part of the bank’s assets in its own right.
The 2010 amendment of the Pfandbrief Act developed this legal notion further in that
the explanatory memorandum to the bill (Bundesrat printed paper 155/10 of March 26, 2010,
p. 76f) clearly states that, in the event of a Pfandbrief Bank’s insolvency, a cover pool does
not constitute a legal entity but remains a special part of the Pfandbrief bank for which the
term “Pfandbrief bank with limited business activities” (“Pfandbriefbank mit beschränkter
Geschäftstätigkeit”) is to be used – separately for each Pfandbrief category. Moreover, it
is to be stipulated under the new § 2 par. 4 Pfandbrief Act that the banking license will be
retained for the cover funds, even if it is revoked for the rest of the bank.
17
Cover Pool Administrator
When insolvency proceedings are initiated in respect of the bank’s assets, the court at the Pfandbrief
Bank’s seat appoints one or more cover pool administrators at the request of the supervisory
authority (§ 30 par. 2 Pfandbrief Act). Cover pool administrators may also be appointed
before insolvency proceedings are initiated if the bank’s imminent insolvency is to be feared and
such action is necessary to protect the Pfandbrief creditors. The cover pool administrator is a
natural person. He has the right to manage and dispose of the cover pools, and represents the
Pfandbrief creditors’ interests. The creation of the office of cover pool administrator strengthens
the protection of the Pfandbrief creditors. It would be inappropriate if the management board of
the insolvent bank or bank at risk of insolvency were allowed to continue maintaining the cover
pools. Given the conflicting interests of the Pfandbrief creditors and the Pfandbrief Bank’s other
creditors, the insolvency administrator would likewise be unable to safeguard the Pfandbrief
creditors’ interests in the appropriate manner.

The Legal Framework for Issuing Pfandbriefe
A number of alternatives are available to the cover pool administrator to ensure that the
Pfandbrief creditors’ claims are satisfied in a timely fashion:
18
He can take the payment flows of the cover pools and service the outstanding liabilities
in accordance with the terms of issue. In particular, he may sell individual assets in order
to procure liquidity and use a funding register for this purpose. This form of settlement
would be continued until all the Pfandbriefe were repaid. Any surplus would be passed to
the insolvency administrator.
As a result of the 2009 amendment, § 30 par. 2 sent. 5, 2nd half-sentence Pfandbrief Act
explicitly states that he may take up a refinancing loan in order to procure liquidity.
In the explanatory memorandum to the 2010 amendment (Bundesrat printed paper 155/10
of March 26, 2010, p. 77) clearly states that the general clause-like description of the
cover pool administrator’s powers and competences also include the issuance of bonds. In
the absence of provisions governing rank, such bonds would rank equal with Pfandbriefe
issued prior to the nomination of the cover pool administrator, meaning they would constitute
covered bonds of Pfandbrief quality. Thus, the new provision set forth in § 2 par. 4
Pfandbrief Act provides the basis on which the cover pool administrator could issue such
bonds under the name “Pfandbrief”.
Following the 2009 amendment, § 31 par. 8 Pfandbrief Act explicitly states that the cover
pool administrator is entitled to make use of the Pfandbrief Bank’s staff and materials, and
that he must refund to the insolvent estate only the costs actually incurred in this respect.
The cover pool administrator has access to all payments that are made in respect of the
cover assets; the insolvency administrator must ensure such access by cooperating with
the cover pool administrator (see also § 31 par. 7 Pfandbrief Act). This also applies to
amounts or partial amounts which pertain to parts of loans included in cover which are
not eligible as cover for Pfandbriefe. The cover pool administrator must hand over such
amounts to the insolvency administrator when called upon to do so (§ 30 par. 3 sent. 3
Pfandbrief Act).
He may transfer all or parts of the cover assets in one cover pool and liabilities under the
Pfandbriefe, together, to another Pfandbrief Bank, subject to approval by the supervisory
authority (BaFin). In this context, he may agree with another Pfandbrief Bank that he will
hold the cover pools on a fiduciary basis for that Pfandbrief Bank. Transferring the cover
pools in this way rules out the need for complex and time-consuming individual transfers.
Rating agencies often raise the question of the “insolvency remoteness of the voluntary
overcollateralization”. A frequent consequence of the stress tests they apply for the timely
servicing of Pfandbriefe is that a Pfandbrief Bank must maintain overcollateralization
exceeding the legally required 2 %. In this connection, to question the insolvency remoteness
of this “excess cover” is to ignore the fact that, within the scope of these stress tests,
such excess cover would automatically be part of the legally required cover. If a rating
agency does not believe that the cover assets are absolutely sound and therefore calculates
what overcollateralization is required, then logically these assets that constitute overcollateralization
are not (from the rating agency’s viewpoint) “voluntary overcollateralization” at

all. Instead, they are part of the (normal) cover, since they are needed (in the rating
agency’s view) to ensure the Pfandbriefe are serviced on time. They cannot therefore
fall within the scope of application of § 30 par. 4 Pfandbrief Act. The German Federal
Government rightly points this out in its reply to a small interpellation (see Bundestag
printed paper 16/13823 of July 21, 2009, no. 6).
Insolvency or Overindebtedness
Where there is a reason for insolvency with regard to the cover pools, separate insolvency
proceedings can be instituted in respect of them at the supervisory authority’s request. If
the Pfandbrief creditors are not fully satisfied under this procedure, they can assert their
remaining claims within the scope of the insolvency proceedings over the Pfandbrief Bank’s
other assets. Under the 2010 amendment of the Pfandbrief Act, § 30 par. 6 Pfandbrief Act
was supplemented accordingly, enabling the cover pool administrator to take the requisite
action.
19

The Pfandbrief Market 2010/2011
Swen Prilla, Christian Walburg | Association of German Pfandbrief Banks
20

In changeable times, investors look for a safe haven. Also in the sovereign
debt crisis that followed the bank crisis and came to a head at the end of
the first half of 2011, Pfandbriefe have proven themselves to be reliable.
Investors stand by the product in difficult times thanks, not least, to the
high degree of transparency of the cover assets. A project which Pfandbrief
banks have embarked upon currently seeks to heighten transparency
on the secondary market.
Government Debt Crisis Depresses Sentiment on the Financial Markets,
Pfandbriefe in Demand
After the IMF and EU rescue shield had been put together and the solution to the Greek debt
crisis seemed to be within reach in the second half of 2010, the sovereign debt crisis intensified
further when Ireland, too, availed itself of the rescue shield in November 2010. In the first
half of 2011, the focus fell on additional Mediterranean states. The situation in Greece grew
even worse, finally prompting S&P to downgrade the Greek credit rating to CCC in June 2011.
The differences between the eurozone countries and the European Central Bank over how to
remedy Greece’s debt problem – notably Germany’s proposal that private creditors participate
in a restructuring of Greek debt – depressed the sentiment in the financial markets. Given
the uncertainty about how the crisis would develop, covered bonds – above all, Pfandbriefe –
increasingly attracted investors’ interest.
21
Swap spreads in comparison*
bp
300
275
250
225
200
175
150
125
100
75
50
25
0
-25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
iBoxx senior financials iBoxx all covered bonds iBoxx German Pfandbriefe
* The comparison is distorted slightly by different durations of the indices.
Sources: Commerzbank, iBoxx

The Pfandbrief Market 2010/2011
Covered Refinancing Gaining in Importance
The considerable interest shown by investors in covered bonds in general and Pfandbriefe
in particular give rise to a win-win situation for refinancing banks and investors. Whereas,
for banks, the advantages of the favorably priced covered refinancing are gaining in importance
compared with senior unsecured bonds, for investors, their need for greater safety and
therefore the safety of the investment are the foremost aspects. In this context, the Pfandbrief
profits from its particularly conservative legal framework, which demands that the cover pools
must be of a consistently high quality.
New issuance of Pfandbriefe saw a positive development. Whilst in 2010, the issuance
volume of €87 billion fell just short of forecasts, the issuance volume in the first half-year of
2011 came closer to expectations at €45 billion. This is true both of Mortgage Pfandbriefe
(including Ship Pfandbriefe) and of Public Pfandbriefe.
First-time issuance 1st HY 2007 1st HY 2008 1st HY 2009 1st HY 2010 1st HY 2011**
of Pfandbriefe in billion € in billion € in billion € in billion € in billion €
22
Mortgage Pfandbriefe* 9.5 31.6 34.2 26.2 21.9
Public Pfandbriefe 58.6 52.8 31.2 23.4 23.5
Pfandbriefe total 68.1 84.4 65.4 49.6 45.4
* incl. Ship Pfandbriefe Sources: Deutsche Bundesbank, vdp
** preliminary figures
A buoyant start to 2011 was followed by a certain easing, a trend which had also been seen
in previous years. Nevertheless, the friendly sentiment on the primary market for Pfandbriefe
was sustained during the first half of 2011. Whereas mostly medium-term maturities had been
sold one year before, longer-dated maturities were again also brought to market.
Jumbo Pfandbriefe posted gross sales of just under €20 billion in the first half-year of
2011. This result is already very close to the target volume for the entire year, which was
calculated at €22 billion following the annual survey of member banks.
The volume outstanding on the Pfandbrief market slipped by €10 billion to €630 billion
in the first quarter of 2011 (-1.6%). By comparison, in the first quarter of 2010, the volume
outstanding contracted by €17 billion to €702 billion (-2.4%).
Because maturities are still in excess of new issues, total Public Pfandbriefe outstanding
fell further. Consolidation in public-sector finance continues because, amongst other things,
there is no substitute that is eligible as cover for formerly government-guaranteed loans of
the Landesbanken and savings banks. This means that the cover pools are shrinking. The
regulatory requirements currently under discussion, such as the leverage ratio, are putting
additional pressure on public-sector finance.

Monthly sales of new issues in 2010 and 2011
in € billion
16
14
12
10
8
6
4
2
0
2010 2011
JUL. AUG. SEP. OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY* JUN.*
Jumbo (bearer) Pfandbriefe 0.5 0.6 1.1 1.0 0.4 0.0 7.9 1.4 3.0 1.5 6.0 0.0
Bearer Pfandbriefe 9.7 1.7 4.3 4.0 1.9 4.2 3.4 4.8 2.4 3.1 2.1 2.2
Registered Pfandbriefe 1.2 0.7 2.0 1.1 1.2 1.9 2.3 1.1 0.7 1.7 0.4 1.4
Sources: Deutsche Bundesbank, vdp
* provisional figures
23
However, Mortgage Pfandbriefe have seen a positive development, their volume outstanding
having risen slightly by just under €5 billion to €232 billion compared with end-2010. On
balance, however, the negative net sales of Public Pfandbriefe had not, by the end of the first
quarter, been compensated by positive net sales of Mortgage Pfandbriefe.
Registered Pfandbrief issuance continued the trend observed in the years before. The fact
that registered Pfandbriefe can be structured in a flexible, non-standardized manner according
to investors’ individual requirements means that interest in the product remains lively.
Given their high share of Jumbo Pfandbrief issues, registered Pfandbriefe accounted for
only 17% of the total issuance volume in the first half of 2011. Nevertheless, the share of
registered Pfandbriefe outstanding remains at a high level, since disposals for the most part
concerned (Jumbo) bearer paper due to maturing Public Pfandbriefe. At end-March 2011,
registered Pfandbriefe accounted for a share of just under 41%.

The Pfandbrief Market 2010/2011
Financial Crisis Drives Development of Interest Rates and Spreads
From the historic low for ten-year Bunds of 2.1 % in August 2010, the yield moved back
up towards the 3% mark at the end of the year. During the first six months of 2011, it then
remained lodged at just over 3%. The debt crisis in Greece, which came to a head towards the
end of the second quarter, triggered only a limited safe-haven reaction, however, pushing the
yield on the 10-year Bund to just below 3%. The renewed flare-up of the sovereign debt crisis
around mid-2010 prompted only a limited reaction from Pfandbrief spreads. However, they
narrowed again at the beginning of 2011 and have since been largely stable vis-à-vis Bunds.
Pfandbrief Yields
in %
7
6
5
4
24
3
2
1
0
01. 1999
01. 2000
01. 2001
01. 2002
01. 2003
01. 2004
01. 2005
01. 2006
01. 2007
01. 2008
01. 2009
01. 2010
01. 2011
Maturity buckets: 1–3 y 3–5 y 5–7 y
Sources: Commerzbank, iBoxx
The widening of spreads in eurozone peripheral states was disproportionately greater. Investors’
focus on sovereign credit risks dominated also the movements on the covered bond
markets Neuemission and contributed to paving the 1. way Halbjahr for the 2010 strong spread differentiation 1. Halbjahr on 2009 the covered
Hypothekenpfandbrief*
bond market. The rally by government bonds of individual peripheral states, which took hold
in early 2011, led to a certain recovery Namens- in the Inhaber- case of the respective Namens- covered bonds, Inhaber- too. As
pfandbrief pfandbrief Gesamt pfandbrief pfandbrief gesamt
concern grew about the extent of, and the lack of a prospect of stabilization of, the Greek sovereign
< 1 Jahr debt and its impact on other 0,0% peripheral 6,6% states, spreads 6,6% widened 0,1% again in 1,7% these countries.
1 bis unter It may 3 J. be seen that, as the country 0,5% credit 12,4% rating falls, 12,9% so the spread 0,7% between 14,1% the respec-
14,8%
1,8%
tive 3 bis government unter 5 J. paper and covered 1,3% bonds tightens. 40,6% In 41,9% isolated cases, 2,2% covered 20,7% bonds have 22,9%
even 5 bis unter been 10 priced J. higher than corresponding 3,3% 22,7% maturities 26,0% of government 11,5% paper. 18,0% 29,5%
10 J. und darüber 7,8% 4,9% 12,6% 25,4% 5,6% 31,0%
gesamt 12,8% 87,2% 100,0% 39,9% 60,1% 100,0%
* inkl. Schiffspfandbriefe
Quelle: vdp Erhebungen

Pfandbrief-Bund-Spreads
in %
200
180
160
140
120
100
80
60
40
20
0
25
Swapspreads Jumbo Pfandbriefe and Jumbo Covered Bonds
in bp
07.2007
01.2008
07.2008
01.2009
07.2009
01.2010
07.2010
01.2011
07.2011
01. 1999
01. 2000
01. 2001
01. 2002
01. 2003
01. 2004
01. 2005
01. 2006
01. 2007
01. 2008
01. 2009
01. 2010
01. 2011
Maturity buckets: 1–3 y 3–5 y 5–7 y 7–10 y
Sources: Commerzbank, iBoxx
560
520
480
440
400
360
320
280
240
200
160
120
80
40
0
Total market France Covered Legal Mortgage Pfandbriefe Public Pfandbriefe
Portugal Covered Spain Covered Single Sweden Covered
Sources: LBBW, iBoxx

Der The Pfandbriefmarkt Market 2010/2011
ECB Covered Bond Purchase Program Brought to Successful Conclusion
On June 30, 2010, the ECB concluded its covered bond purchase program. The purchases
came to a total of €60 billion, distributed among 422 bonds; the primary market accounted
for 27% and the secondary market for 73% of all purchases. Immediately following the
announcement on May 7, 2009, positive effects for the primary and secondary market were
discernible.
In the opinion of the ECB, the objectives that had been set with the program were
achieved. The program improved market liquidity, bringing it close to pre-2008 levels, and
relaxed the refinancing conditions for banks and enterprises. It also facilitated the re-opening
of the primary market for Jumbo Pfandbriefe. Nevertheless, according to analyses by the
ECB, the aggregate volume of bank refinancing was not increased. Instead, costly uncovered
refinancing was replaced by more favorably priced covered bonds. Banks’ refinancing costs
were thus reduced. In this way, banks were encouraged to maintain or expand their lending
volumes. On the secondary market, the announcement of the program was itself enough to
trigger a marked narrowing of spreads, although the extent to which spreads tightened varied
fairly considerably from one jurisdiction to the next. The conclusion of the program did not
harm issuance in Covered Bonds going forward
26
vdp Transparency Initiative on Data Required under §28 Pfandbrief Act
Attracts Great Interest
On September 20, 2010, the vdp Pfandbrief banks launched the publication on the vdp’s website
of individual transparency data. Demand by and response from investors, analysts and
other market players underscore the success of this initiative, which is also demonstrated by
the number of downloads. At end-June 2011, the data of the first quarter of 2011 alone had
been downloaded almost 6,000 times. In particular, the rising number of downloads in CSV
format, which makes computerized further processing possible, testifies to the high level of
acceptance of the transparency initiative. The main focus of analysts’ interest is on the quality
and composition of the cover pools. An e-mail alert function has since been installed on the
vdp website pages on the data required under § 28. This function provides automatic notification
when new information is available on these pages.

vdp Initiative for the Improvement of Secondary Market Transparency
The aim of the secondary market initiative is to grant investors and other interested parties
access to information on Jumbo Pfandbrief spreads on the vdp website. An external service
provider calculates, for all Jumbo Pfandbriefe with a residual maturity of more than two years,
average spreads on the basis of spread reports received from the reporting banks (spread vs.
asset swap). The vdp plans to publish the data in tabular form and in the form of point clouds.
The banks report the relevant data to software and consulting company Moosmüller & Knauf,
with whom the Association already cooperates successfully in calculating the vdp Pfandbrief
curves. To prevent distortions, the two highest and lowest spread reports for each Jumbo
Pfandbrief are excluded from the calculation of the average spread. The test phase is proceeding
well. Ten banks already submit data on a regular basis. After going live, the number of
participating syndicate banks is to be increased to as many as 15 institutions.
In addition to the anticipated transparency requirements as part of the MiFID review, the
initiative will offer the possibility to use the data independently by giving investors an overview
of the entire Jumbo Pfandbrief market on just one Internet page. In order to further optimize
the quality of the spread reports during the test phase, and to integrate additional banks in the
calculation process while the test phase is still in progress, vdp plans to begin publishing the
Jumbo spreads until the end of the third quarter. Quality management will be performed on an
ongoing basis to ensure the reliability of the data supplied and the results published.
27

Effects of Basel III
on the Pfandbrief-based
lending business
Dirk Auerbach | KPMG AG
28

As a reaction to the problems and regulatory weak spots that have
been identified since the onset of the financial crisis in 2007, a series of
domestic and international regulatory initiatives have been introduced to
increase the resilience of the banking industry. The most recent and, presumably,
most significant of these initiatives resulted in the new capital
and liquidity requirements developed by the Basel Committee on Banking
Supervision (“Basel III”), the final version of which was presented in
December 2010. Basel III provides for major adjustments to Basel II, but
retains its predecessor’s basic regulatory design. The adjustments include
tougher requirements for the quality and quantity of regulatory capital,
as well as higher capital charges for certain risk positions, especially
counterparty default risks. In addition, Basel III provides for the introduction
of a non-risk-based leverage ratio, as well as quantitative, minimum
short-term and medium-term liquidity standards. At the European level,
the Basel III regulations are to be implemented as part of a draft amending
directive (CRD IV) that ushered in the European legislative process
in July 2011 and has been forwarded on to the European Council and the
European Parliament for review. This paper will discuss the reforms to
regulatory capital requirements proposed under Basel III that are relevant
to the Pfandbrief business and the impact these are expected to have on
Pfandbrief cover business. In addition, the paper will touch briefly on
the planned EU revision of the potentially privileged treatment of mortgage
loans which, while not part of the Basel III regulatory framework,
is expected to be implemented along with Basel III as part of the CRD IV
amendment package. The new liquidity requirements under Basel III will
also be discussed briefly.
29
Basel III – Selected amendments
Regulatory capital and solvency
Adjustment to regulatory capital definitions and capital ratios
In order to increase the loss-absorbing capacity and, consequently, the resilience of the banking
sector, the Basel III regulatory framework proposes above all a significant increase in the
quality and the quantity of regulatory capital. At the same time, a new, principles-based definition
of regulatory capital components (that is therefore largely independent of the legal form)
is intended to lead to greater international standardisation of minimum capital requirements.

Effects of Basel III on the Pfandbrief-based lending business
30
The new Basel rules recognise three categories of capital: common equity Tier 1 capital,
additional Tier 1 capital and supplementary (Tier 2) capital. Each of these three categories is
defined using a list of qualifying criteria (each of which must be met). Tier 3 capital has been
completely eliminated by Basel III.
On the one hand, the quality of regulatory capital will be enhanced by the fact that these
qualifying criteria are significantly more restrictive than before, especially with respect to
which hybrid equity instruments can be counted toward a bank’s regulatory capital. The initial
restrictions have already been implemented by the recent amendment to the German Banking
Act (KWG) effective 31 December 2010, which transposed the EU’s CRD II amending directive
into law. Basel III will lead to additional limitations. Under Basel III, only hybrid instruments
with no maturity date and no incentives to redeem will continue to be considered as regulatory
core capital. Most of the components that can no longer be counted as core capital under
Basel III will be phased out over a 10-year period beginning in 2013. However, this period
will have to be reconciled with the significantly longer transition periods provided for with the
implementation of CRD II. In a departure from the general qualifying criteria that are independent
of legal form, the Basel Committee proposes that a joint-stock company’s common equity
Tier 1 capital should include only paid-in capital and retained earnings – but there are signs
that this highly disputed Basel III restriction will not be adopted into European Union law.
On the other hand, deductions used to determine regulatory capital will also be redefined,
primarily with the goal of harmonising them internationally. In addition, in future they will be
deductible only from common equity Tier 1 capital, not half from core capital and half from
supplementary capital, as allowed previously in some cases. With respect to the structure of
the regulatory capital, this will lead to an increase in the significance of common equity Tier 1
capital, which is viewed as particularly high quality, thanks to its distinct loss-absorbing
capacity. Basel III proposes a gradual adjustment to the new deduction requirements, from
the beginning of 2014 until the beginning of 2018.
Common equity Tier 1 capital
Specific criteria
e.g., shares, retained earnings, capital
contributions by dormant partners, cooperative
society shares
Other Tier 1 capital
Specific criteria
Deductions
including goodwill, deferred taxes,
share buybacks
Tier 1 capital
Supplementary (Tier 2) capital
Specific criteria
Tier 3 capital

The The significance of common equity Tier 1 capital will be enhanced by another element of
Basel III: under current regulations, common equity Tier 1 capital must make up 50% of total
core capital, which in turn must be at least as high as the supplementary capital. In terms of
credit risk, this means that currently the minimum ratio is 2% of risk-weighted assets for common
equity Tier 1 capital and 4% for total core capital. While the regulatory minimum capital
requirement to back counterparty default risks under Basel III is still 8% of the risk-weighted
assets, the new rules require at least 4.5% of the risk-weighted assets to be backed with common
equity Tier 1 capital and at least 6% with Tier 1 capital. The substantial tightening of
Tier 1 capital ratio requirements will be phased in gradually, from the beginning of 2013 to the
beginning of 2015.
Introduction of additional capital buffers
In future, the regulatory minimum capital requirement will be supplemented by the introduction
of two new regulatory capital buffers, primarily designed to reduce the procyclical effects
of the current Basel capital regime, which proved to be problematic during the financial crisis.
On the one hand, banks will be required to build up a capital reserve, the so-called capital
conservation buffer, above and beyond the regulatory minimum capital requirement during
good times to absorb losses during bad times without violating the regulatory minimum capital
requirements. If they are in danger of such a violation, banks must reduce lending and/
or undertake emergency sales of assets; this “procyclicality” can further exacerbate the crisis
situation. The capital conservation buffer must be comprised exclusively of common equity
Tier 1 capital and will gradually be increased to 2.5% of risk-weighted assets between January
2016 and January 2019. If the capital contribution buffer falls below 2.5%, the bank will
be subject to distribution constraints; the more the reserved capital buffer deviates from 2.5%,
the greater the constraints.
Unlike the capital conservation buffer, affected banks will not be required to maintain the
proposed additional countercyclical capital buffer on a permanent basis, but rather only during
periods of excessive aggregate credit growth. This is designed by regulators to intentionally
dampen credit growth and to build up additional capital reserves for the downturns that often
follow cyclical booms. Identification of excessive credit growth and the determination of the
exact amount of the countercyclical capital buffer to be held will be left to national governments.
The Basel rules propose a maximum buffer of 2.5% of risk-weighted assets. Banks with
international operations should use the weighted average of the national requirements in the
individual countries where its credit exposures are domiciled as their countercyclical capital
buffer. The countercyclical capital buffer must also consist exclusively of common equity Tier 1
capital. If the required level is not held, distribution constraints shall apply.
31
Higher capital charges for certain risk positions
While the minimum capital requirement under the Basel III regulations described above
remains at 8% of risk-weighted assets (with the exception of the two new capital buffers to be
introduced) and will “only” induce a shift towards higher-quality capital components, the rules
also include requirements that will entail increases in the capital charges for risk-weighted
assets relative to the status quo for certain categories of risk positions.

Effects of Basel III on the Pfandbrief-based lending business
Development of regulatory capital requirements under Basel III
12%
Tier 1 (core) capital
10%
Conservation buffer
(consisting of common
equity Tier 1 capital)
Common equity Tier 1
capital
Hybrid capital
Supplementary (Tier 2)
capital
8%
6%
4%
2%
0%
2%
2%
4%
2%
2%
4%
3.5%
1%
3.5%
4%
1.5%
2.5%
4.5%
1.5%
2%
0.625%
4.5%
1.5%
2%
1.25%
4.5%
1.5%
2%
1.875%
4.5%
1.5%
2%
2.5%
4.5%
1.5%
2%
Countercyclical capital buffer
0% to 2.5% common equity Tier 1 capital – national discretion
No longer qualifying
capital instruments (Tier 1 + 2)
Deductions
10-year transition phase
20% 40% 60% 60% 100%
2011 2012 2013 2014 2015 2016 2017 2018 2019
32
New capital requirements introduced to reflect the counterparty credit risks of OTC derivatives
will be particularly relevant to Pfandbrief banks that have included derivatives in cover
in order to address interest-rate or exchange-rate risks. Here, the Basel III rules provide for
the introduction of a regulatory capital requirement for the CVA (Credit Valuation Adjustment)
risk, understood to refer to the risk of mark-to-market losses on derivatives due to deterioration
in the credit risk of the derivative counterparty. As a rule, the appropriate capital charge
is determined at the level of the entire derivative portfolio, using a prescribed regulatory formula
which, in particular, includes the EaD (Exposure at Default) values and the credit-risk
weighting, determined using the methods already applied for the purposes of the default risk
capital charge. For derivative contracts entered into with a central counterparty, the previous
exposure exemption will be repealed. However, for such derivatives, a privileged risk weighting
is proposed in order to preserve the incentive to clear through central counterparties. In
addition, banks using the IRB approach will be subject to higher capital charges for exposures
to most companies in the finance industry, as the Basel III rules increase the measure used for
the systematic risk of such companies within the risk-weighting formula.
Excursus: Treatment of mortgage loans under CRD IV
The CRD IV is intended not only to implement the Basel III framework at the level of the EU,
but also to bring about further standardisation of the regulatory framework in Europe by abolishing
national options and discretionary powers (creation of a “Single Rule Book”). Especially
relevant to Pfandbrief banks in this regard is the planned revision of options for privileged
treatment of mortgage loans within the context of regulatory risk-weighting. Above all the proposal
suggests to
introduce a “hard test”, within the meaning of Article 35, paragraph 3, clause 2 of the German
Solvency Regulation (SolvV) in the residential property segment (as a precondition for

waiving exemption from retroactive application for purposes of solvency in specific cases)
and
increase privileged risk-weights conditional to domestic loan loss and default histories in
EU member states warranting such measures.
If actually implemented, all of these amendments could lead to a further increase in required
regulatory capital.
Introduction of a maximum leverage ratio
Given the recent experience from the financial crisis, the regulatory maximum leverage ratio
stipulated in the Basel III framework was designed to put a definitive end to the build-up of
excessive debt in the banking sector, thereby preventing painful deleveraging processes in the
real economy in crisis situations. The leverage ratio (LR) is intended to act as an additional
backstop measure to supplement the risk-sensitive capital requirements of the Basel regulations.
According to CRD IV, the leverage ratio will initially be implemented at the beginning of
2013 as an observation ratio as part of the bank regulatory review process under Pillar II of the
Basel framework. During the first half of 2017, the last year of the observation phase, an analysis
will determine whether a mandatory leverage ratio unreasonably burdens individual business
models and/or credit transactions, and a decision will be made as to whether it should
remain in Pillar II as an observation ratio or be moved to Pillar I as a mandatory regulatory
ratio. At the same time, an early, firm commitment by politicians as to which direction the process
should take will be crucial for avoiding the undesirable strategic positioning on the part of
the banking industry that is already expected to start soon. The leverage ratio is defined as
33
Leverage Ratio =
Capital measure
Exposure measure
Basel III rules call for a minimum leverage ratio of 3%, subject however to final calibration.
A corresponding qualification applies to the specific definition of the leverage ratio, as well
as to the capital measure in the numerator and the exposure measure in the denominator.
Based on the existing definition in the Basel III framework, the capital measure in the
numerator is determined by the Tier 1 capital (in accordance with Basel III). As an alternative,
during the course of the Basel III implementation at the EU level, consideration will be given
to limiting this to common equity Tier 1 capital. In line with the relevant amounts set forth in
the solvency regulations, the exposure measure encompasses on-balance-sheet assets, derivatives
and off-balance-sheet transactions. On-balance-sheet assets are regularly reported at the
respective book value; for derivatives, the stated value is determined using the mark-to-market
method (already laid down in the solvency regulations).
It should be noted that no credit-risk mitigants (e.g., securities collateral, mortgages, guarantees)
may be used to reduce the exposure measure of the hedged underlying transaction.
The only exception to this under the Basel III regulations is for certain netting agreements,
especially involving derivatives transactions.

Effects of Basel III on the Pfandbrief-based lending business
Liquidity buffer (liquidity coverage ratio)
For the liquidity buffer (liquidity coverage ratio/LCR) proposed under Basel III, in future all
lending institutions must hold highly liquid assets in order to pass a stress scenario lasting 30
days without any available refinancing. In addition to sovereign debt, Pfandbrief (and other
covered bonds) will also be recognised as liquid assets, currently for up to 40% of the buffer
and at a haircut of 15%. The detailed criteria for recognising covered bonds as highly liquid
asset components have not been finalised.
34
Still undecided is how the liquidity of the covered bond can be adequately factored in when
measuring the size of the liquidity buffer. The parameters for determining the liquidity
requirement currently stipulate a so-called “run-off factor” of 100% for Pfandbrief. This
assumes that in a crisis situation, covered bonds will not be available as a refinancing
instrument and that follow-up financing for outstanding Pfandbrief will not be possible
upon maturity in such a scenario. The run-off factor would have to be reduced significantly
to adequately reflect the Pfandbrief’s proven record as a source of liquidity to banks during
serious financial crises.
The assets in the liquidity buffer are rightly subjected to rigorous requirements. At the
same time, the criteria for accepting Pfandbrief and other covered bonds into the liquidity
buffer need to be further refined. Precisely which criteria will be selected will be determined
during an observation phase running through the end of 2013. The parameters for
recognition of covered bonds in the liquidity buffer will then be finalised. This means that
there will be an opportunity to rethink the maximum percentage of covered bonds in the
LCR (currently 40%), as well as the prescribed haircut of 15%.
Effects of Basel III on the Pfandbrief-based lending business
With the implementation of the Basel III rules beginning in 2013, the entire banking industry
will regularly face higher regulatory capital requirements due to the increased quality requirements
for equity components, the new capital buffers and the tendency towards higher regulatory
deductions. Banks that are currently not operating significantly above the regulatory minimum
capital requirement will be required to increase capital and/or boost retained earnings or
reduce risk positions on a regular basis over the medium term.
Overall, this will lead to higher absolute equity and total capital costs. Because more – and,
crucially, expensive – equity will have to be held for the same business activities, the investor’s
return on equity will tend to decrease. As margins in the pfandbrief-based lending business –
especially public sector lending – tend to be low, even slight increases in refinancing costs will
place upward pressure on credit terms.
If the leverage ratio is implemented as a Pillar 1 quantitative minimum requirement beginning
in 2018, thereby joining the risk-based regulatory capital requirements public sector
lending will, in all probability, be particularly affected. This is due to the fact that this segment
in general has a low credit risk, which is reflected in correspondingly low regulatory riskweightings,
low regulatory capital and, consequently, a relatively high degree of leverage.

For banks specialising in public sector lending, the leverage ratio would quickly assume the
role of a truly binding constraint. This, in turn, would permanently reduce the actual significance
of the risk-based regulatory capital requirements. At the very least, it is questionable
whether such an arrangement is compatible with the regulatory intent to establish a “backstop
measure” and whether it is desirable.
Moreover, if the leverage ratio represents a binding constraint on the pfandbrief-based
business, additional equity will be required to accommodate additional capital charges of cover
loan business. The resulting shift in the composition of refinancing to capital instruments with
higher required returns will cause overall refinancing costs to rise, which must be incorporated
into the margin requirements calculation. Financial products for government financing may
become more costly as a result of introducing the leverage ratio.
Outlook
In order to assess the impact of the likely general rise in the cost of credit terms due to regulatory
changes, the issue needs to be considered in the overall context. In Germany, this situation
is significantly influenced at the present time by the collection of contributions for the
restructuring fund (bank levy or “Bankenabgabe”). Because refinancing instruments with a
debt component are mostly incorporated without differentiation into the basis used for calculating
the levy and the related expenses must be generated in the bank’s lending business, this
regulation is already leading to an increase in loan margins, to the extent that the current level
of annual results must be held.
This raises the question of whether the aforementioned margin increases can be achieved
in light of the demand pattern, particularly with respect to public sector lending. The sum total
of the causal mechanisms described will influence pfandbrief-based refinancing as well as
the traditionally low-credit-risk loan business of the Pfandbrief banks. Since the consultations
began, the Association of German Pfandbrief Banks has stated that this must be given due
consideration by the relevant banking supervision decision-makers when they debate the final
version of the leverage ratio.
35

Quo vadis? The regulatory
treatment of Pfandbriefe under
Solvency II
Mathias Christoph Köhne | Gothaer Finanzholding AG
36

Solvency II is intended to reform the system of insurance regulation currently
in place in Europe (Solvency I). The aim is to establish a risk-based
and market-oriented system in order to further improve the supervision of
the risk-bearing capacity of European insurance companies – and thus to
better protect consumers.
The Solvency II Framework Directive was adopted in the EU Parliament
on 22 April 2009 and by the European Council on 10 November 2009. On
17 December 2009, it was finally published in the Official Journal of the
European Union (EU). The Directive will be given concrete form through
“delegated acts” and implementing acts. These acts must be approved
before the planned start date of Solvency II on 1 January 2013 in order to
ensure the coherent implementation of the new supervisory regime.
The new supervisory regime in the insurance sector is based on three pillars. The first
pillar involves capital adequacy for insurers. A standardised approach will be applied to
determine an insurer’s capital adequacy, which can then be used in future to determine its
capital requirements. The alternative to this standardised approach is an internal risk model
recognised by the supervisory authorities, which must be developed separately for each
undertaking. The European Commission and the European supervisory authority, EIOPA,
have made use of a number of studies to review the impact of drafts of the standardised
approach. The most recent impact study was QIS5, which was carried out across Europe
in autumn 2010. The quantitative approach of the first pillar is complemented by the qualitative
risk management requirements placed on insurers by the second pillar, as well as the
corresponding reporting requirements of the third pillar.
This paper presents an introduction to the classification system of Solvency II. The focus
is on the calculation of capital requirements using the standardised approach laid down in
the first pillar. This highlights critical issues concerning Pfandbriefe. Pfandbriefe play a major
role in investments made by German insurers: around one-quarter of their total investments
as at the end of 2010 were in this product group. The future supervisory treatment of the
Pfandbrief established by the delegated acts and implementing acts is therefore of clear
interest to investors. This paper largely ignores the second and third pillars of Solvency II.
Seit 2003 nahm die Taktzahl der Novellierungen des Rechtsrahmens für die Pfandbriefemittenten
deutlich zu: die Abschaffung der Gewährträgerhaftung und die Modifizierung der
Anstaltslast, die zunehmende Bedeutung gemischter gegenüber reinen Hypothekenbanken,
die Internationalisierung des Pfandbriefabsatzes und der aufkommende Wettbewerb mit ausländischen
Covered Bonds waren wesentliche Beweggründe des Gesetzgebers für die Schaffung
des Pfandbriefgesetzes, das Hypothekenbankgesetz, Öffentliches Pfandbriefgesetz sowie
das Schiffsbankgesetz im Jahr 2005 auf sich vereinte und grundlegend neu gestaltete. Über
die Abkehr vom Spezialbankprinzip hinaus wurden weitere Neuerungen wie eine verbesserte
Regulierung der Überdeckungsanforderungen, Transparenzvorschriften des § 28 PfandBG
sowie Anforderungen an das Liquiditätsmanagement der Deckungsmassen in das Gesetz aufgenommen.
Diese Maßnahmen wurden ermöglicht bzw. maßgeblich flankiert durch die Schaffung
der Rolle des Sachwalters im Jahr zuvor, durch den die insolvenzrechtliche Abschottung
der Deckungsmassen perfektioniert wurde.
Im Folgenden werden die praktischen und gesetzlichen Anforderungen an das Deckungsgeschäft
einer Pfandbriefbank im aktuellen regulatorischen Umfeld beschrieben und am
Beispiel einer zentralen Organisation des Deckungswesens gezeigt, wie diesen Anforderungen
in der Praxis Rechnung getragen werden kann.
37

Quo vadis? The regulatory treatment of Pfandbriefe under Solvency II
The calculation of capital requirements under Solvency II
38
Under the regulations, the Solvency Capital Requirement (SCR) is the amount of capital that
undertakings will be required to hold in order to carry out regulated operations. The Minimum
Capital Requirement (MCR) defines the lowest level at which a business may maintain operations.
If capital falls below this level, the undertaking may not be allowed to take on new business.
If necessary, an undertaking’s authorisation to operate may also be revoked. A ladder
of supervisory intervention exists between the SCR and MCR which establishes supervisory
powers on the basis of an insurer’s solvency situation. The ladder of supervisory intervention
is intended to ensure that insurers receive equal treatment. This catalogue of measures also
makes it possible for insurers to predict what action will be taken by the supervisory authorities.
The further an insurer falls below the SCR, the more far-reaching the supervisory authority’s
powers become.
The regulatory capital requirements under the first pillar are calculated using a riskoriented
approach. Specifically, this means that insurers must include in the calculation all
relevant risks to which they are exposed by their operations. The assumption for all types of
risk is that the assumed loss will not exceed a probability of 99.5%. The risks calculated are
then combined using a correlation matrix. Since it is correctly assumed that there is not a
positive linear relationship between the various risks, the correlation coefficients are lower
than 100%. In other words, the risks will not materialise in full at the same time.
In addition to the technical risks in the life, health and non-life segments, insurers must
also include the market and counterparty risks in the calculation. Market risk consists, in turn,
of six sub-risks: interest rate risk, equity risk, property risk, spread risk, foreign exchange risk
and concentration risk 1) . An insurer’s assets must be allocated to the corresponding sub-risks.
The interest rate risk, spread risk and concentration risk are of particular significance for
Pfandbriefe and covered bonds.
Interest rate risk
The interest rate risk reflects the risk that the risk-free market interest rate will change and
thus lead to a decrease or an increase in the market values of fixed-income assets on both
sides of the balance sheet. The greater the difference in duration between the interest-bearing
assets on the asset side and the liabilities on the liabilities side, the greater the insurer’s interest
rate risk. For this reason there is no fixed capital requirement for Pfandbriefe or other
fixed-income securities resulting from the interest rate risk. If the duration on the asset and
liabilities sides is exactly the same, the capital requirement resulting from the interest rate risk
may even in principal be eliminated. It is particularly important for life insurers to close this
duration gap as they typically have relatively long-term liabilities in their portfolios.
1)
In QIS5, an illiquidity premium risk also had to be included in the calculation. This risk related exclusively to an insurer’s
liabilities. At the time of going to press, it was not certain whether the illiquidity premium risk would actually be established
as part of the standard model.

Spread and counterparty risk
The equivalent under Solvency II to credit risk in banking regulation is spread and counterparty
default risk. However, securities assigned to spread risk do not have to be allocated to
counterparty default risk or vice-versa. The spread risk reflects the risk of the widening of
credit spreads. It thus describes the changes in market value resulting from an increase in the
yield differential above the risk-free yield curve. The spread risk applies to the majority of the
interest-based securities in the portfolio, including asset-backed securities and credit risks
transferred via credit derivatives. The counterparty default risk, in contrast, covers the counterparty
risks of derivatives and other risk-mitigating agreements as well as all securities that are
not allocated to the spread risk. The latter item primarily relates to mortgage and insurance
policy loans that have been granted.
Both Public Pfandbriefe and Mortgage Pfandbriefe are subject to spread risk. In contrast to
all other interest-bearing securities allocated to spread risk, the risk factors for Pfandbriefe in
QIS5 were lower. However, this is only the case for covered bonds as defined in the Directive
on Undertakings for Collective Investment in Transferable Securities (UCITS) that have a AAArating.
This is intended to reflect the particularly high level of safety offered by these securities.
In QIS5, the capital requirement for a Pfandbrief designed as a zero-coupon bond with a
maturity of 10 years was around 6%. This requirement is thus around three percentage points
lower than that for an unsecured corporate bond with the highest credit rating, for which
around 9% of the market value had to be deposited (cf. figure 1).
39
Fig. 1:
Spread risk: Capital requirement as percentage of debt instrument
on market value basis
Spread risk I
Corporate bond (AAA) Pfandbrief (AAA)
35%
30%
25%
20%
15%
10%
5%
0%
1 2 3 4 5 6 7 8 9 10 15 20 30 40 50
Maturity (years)

Quo vadis? The regulatory treatment of Pfandbriefe under Solvency II
In contrast, Pfandbriefe with a rating of AA or worse are treated in the same way as unsecured
debt. The capital requirement for 10-year Pfandbriefe increases to around 11% with a AA-rating,
to about 14% with an A-rating and to as high as ca. 25% with just a BBB-rating. The capital
requirement for Pfandbriefe without a recognised rating is approximately 29% (cf. figure 2).
For privileged risk weightings it can be assumed that investors will prefer Pfandbriefe and
other covered products to uncovered bonds.
As the approach for calculating the spread risk depends on the rating and on the modified
duration of a security, the capital requirement for fixed-income securities generally increases
for poorer ratings and longer maturities (see Illustration 2). Ignoring the diversification effects
resulting from the correlation assumptions made in the standard model, the capital requirement
for a AAA Pfandbrief designed as a zero-coupon bond increases from around 3% for
a five-year bond to more than 6% for 10-year bonds and finally to around 11% for 20-year
bonds. While the interest rate risk encourages life insurers in particular, with high durations
on the liabilities side, to increase the level of duration on their asset side, the spread risk offers
the opposite incentive.
Fig. 2:
Spread risk II
AAA AA A BBB BB B or lower unrated
40
Spread risk: Capital requirement as percentage of Pfandbrief on
market value basis
70%
60%
50%
40%
30%
20%
10%
0%
1 2 3 4 5 6 7 8 9 10 15 20 30 40 50
Maturity (years)
In contrast, government bonds from the European Economic Area (EEA) have thus far been
free from spread risk, regardless of their creditworthiness. There was no capital requirement
in QIS5 even for Greek and Portuguese government bonds, although both of these countries
have been hit by multiple ratings downgrades. In contrast to issuers of Public Pfandbriefe, this
regulation grants the countries of the EEA a privilege that is largely politically motivated. But
in view of the recent discussions regarding creditor participation (bail-in), credit and default
risks in highly-indebted Euro countries can no longer be basically disregarded. The proposed
introduction of collective action clauses underscores this argument.

Counterparty default risk
Mortgage loans are closely related to Mortgage Pfandbriefe and are thus frequently regarded
as a substitute. However, the resulting capital requirements under QIS5 were not necessarily
identical. In contrast to Pfandbriefe, mortgage loans were allocated to counterparty default
risk. The calculation of the capital requirement in this category does not depend directly on the
creditworthiness of the borrower or on the term of the mortgage loan. Instead, it is based on
the relationship between the market value of the security provided (i.e. the property) and the
market value of the loan. The capital requirement for a loan that is fully covered by collateral
is around 4% (cf. figure 3). This level is roughly comparable to the capital requirement for a
AAA-rated Pfandbrief designed as a zero-coupon bond with a seven-year maturity. This would
render unfounded the concerns sometimes expressed that Solvency II creates significant competitive
advantages for mortgage loans over Pfandbriefe. However, this concern remains valid
if one takes into account the fact that the large majority of the Pfandbriefe currently issued
have maturities of six to eight years.
Fig. 3:
Counterparty default risk
Counterparty default risk: Capital requirement as percentage of
mortgage loan on market value basis
16%
14%
12%
10%
8%
6%
4%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 130%
Ratio: Market value of security (property) / market value of loan
41
However, since the interest rate risk will in future give insurers incentives to increase duration
on the asset side depending on the maturity of their technical liabilities, the above statement
is disputable. This is because duration is ignored in the calculation of counterparty default risk
in the Solvency II standard model. As a consequence, the creation or building up of a portfolio
with long-term mortgage loans gives insurers the opportunity to minimise the capital requirement
for interest rate risk without being punished elsewhere. However, increasing the level of
duration within a Pfandbrief portfolio would result in an additional capital requirement in the
spread risk. Investment in long-term government debt from the EEA offers a more favourable
solution. Such investments are subject to no additional costs – neither from the spread risk nor
from the counterparty default risk – beyond the capital requirements of the interest rate risk.

Quo vadis? The regulatory treatment of Pfandbriefe under Solvency II
Debt from EEA countries is currently privileged in the area of concentration risk, too. No
concentration risk as such is currently required to be calculated for this debt, regardless of
the actual concentration level. Concentration risk as set out in the standard model only exists
when a threshold representing the maximum acceptable percentage of a single debtor as part
of the overall investment is exceeded. The standard model does not include other forms of
concentration, such as geographic concentration or industry concentration, when calculating
the concentration risk.
The acceptable threshold generally depends on the rating of the security issued. A maximum
threshold of 15% per counterparty has been established for Pfandbriefe and other covered
bonds as set out in the UCITS directive, provided they have a rating of at least AA. If this
percentage is exceeded, QIS5 called for an additional capital requirement of 0.12% for each
additional percentage point by which the threshold is exceeded. The additional capital requirement
for Pfandbriefe with an A rating was 0.21%, for BBB-rated Pfandbriefe it was 0.27%
and for Pfandbriefe with an even worse rating it was 0.73%. As with the spread risk, this provides
privileged treatment for Pfandbriefe over other fixed-income securities, which only have
thresholds of 3% or 1.5% per issuer.
Summary and Outlook
42
Pfandbriefe are a particularly popular asset class for German insurance companies. Around
25% of their total investments were in this product group as at the end of 2010. Whether this
remains so or whether the investment behaviour of insurers will change depends partly on
the future regulatory capital requirements for insurers provided for under Solvency II. The delegated
acts and implementing acts, which must be approved before the expected start date of
Solvency II on 1 January 2013, will set out the specific form of the capital requirements.
The privileging of the Pfandbrief over unsecured corporate bonds and other interestbearing
instruments in the Solvency II standard model shown in the latest Europe-wide impact
study will play a major role in determining whether the German insurance industry can remain
a key investor group. However, the conditions for recognising this privilege are comparatively
high and have thus far not been rigorously implemented. This makes it questionable why it is
only AAA-ratings within the spread risk that enable Pfandbriefe to benefit from being privileged.
If the goal is dependency on ratings, it would make sense for this to correspond to the
regulation of the concentration risk and thus be extended to at least include AA-rated Pfandbriefe,
if not the entire investment-grade segment.
In spite of a hypothetical expansion of the proposed privilege of Pfandbriefe to include
other rating classes, these could become slightly less attractive in comparison to competing
asset classes. This applies in particular to insurers, which have to service very long-term

liabilities and which plan to optimise their regulatory capital requirements. In QIS5, both government
debt and mortgage loans required lower solvency capital requirements. Ignoring all
other decision-making criteria, investors would thus prefer these assets when creating their
investment portfolio.
In addition to the solvency capital requirements that have been the main focus of this
paper, Solvency II also introduces changes to the valuation of assets for regulatory purposes.
This also has an impact on Pfandbriefe. Under Solvency II, all investments will in future be
valued on the basis of their current value. This will generally have the effect of increasing the
volatility of balance sheet values on the asset side. As a result, Solvency II could render one
major reason to design Pfandbriefe as registered bonds irrelevant. The increased volatility in
the regulatory balance sheet could be problematic, even if accounting principles in accordance
with German commercial law are not affected by Solvency II. In some circumstances, insurers
with long-term liabilities will have a particularly strong incentive to change their management
of the asset and liabilities sides conforming to short-term volatility in their regulatory balance
sheet, although their obligations will not have to be serviced for many years.
Overall, however, Pfandbriefe will continue to play a very important role in the investment
allocation of German insurers as a result of their excellent credit ratings, stable returns and
established infrastructure.
43

Pfandbriefe in Securities
Indices – Current Trends and
Applications
Franz Rudolf, Florian Hillenbrand | Unicredit Bank AG
44

“Benchmarks” are reference or comparative values used for measuring
performance and are expressed in the form of an indicator. Similarly,
“benchmarking” describes the continuous methodical comparison, for
example, of pre-defined performance against the performance of the benchmark.
In so doing, it must be determined which benchmark is to be used
(e.g. iBoxx EUR German Covered Bonds or indices with a certain maturity
band, e.g. 3-5 years) and which indicators are to be used to determine
performance (e.g. total return or absolute spread performance). Establishment
of the benchmark is of particular importance here. From the investor
standpoint, the respective investment guidelines are particularly to be
taken into account when selecting the “correct” benchmark.
In addition to volume criteria (e.g. >EUR 1 billion), these might include, in particular, ratings
criteria (e.g. only AAA-rated covered bonds or only covered bonds of issuers with a specified
minimum rating), country allocation criteria (e.g. only the Eurozone), or criteria relating to
the corresponding legal framework (e.g. only covered bonds subject to special laws on covered
bonds). This gives rise to a variety of possible combinations, which in some cases are
implemented in such a way that existing indices are modified for the individual investor, thus
creating an individual benchmark. In our case, benchmarking involves the comparative evaluation
of the investment performance of a specified Pfandbrief/covered bond against the performance
of the respective covered bond index.
45
Clarification of Benchmark
By way of clarification, we would like to point out that in the world of covered bonds, the
term “benchmark” is often used as a shorthand for the criterion of issuance volume. With the
introduction of the Jumbo Pfandbrief in 1995, which had a minimum issuance volume of DM
1 billion, and continuation of the brand with the Jumbo Covered Bond, which has a minimum
issuance volume of EUR 1 billion, the term “benchmark covered bond” is often associated
with this. Over the past 18 months, the volume-based term has now been extended, with market
acceptance, to include covered bonds with a minimum issuance volume of EUR 500 million.
2003 This is nahm also die evident Taktzahl in the der current Novellierungen discussion des of whether, Rechtsrahmens for example, für die the Pfandbrief-
criterion of the
Seit
emittenten iBoxx Covered deutlich Bond zu: Index die Abschaffung regarding minimum der Gewährträgerhaftung issuance volume should und die be Modifizierung changed from der EUR
Anstaltslast, 1 billion to EUR die zunehmende 500 million. In Bedeutung addition to gemischter such aspects gegenüber as secondary reinen market Hypothekenbanken,
liquidity, die significance Internationalisierung of bond volume des is Pfandbriefabsatzes also illustrated by und the relationship der aufkommende to the topic Wettbewerb at hand, mit i.e. ausländischen
significance Covered of securities Bonds indices, waren since wesentliche lowering Beweggründe the minimum des issuance Gesetzgebers volume für for die the Schaf-
iBoxx
the
fung Index des would Pfandbriefgesetzes, result in the addition das Hypothekenbankgesetz, of (currently) 113 covered Öffentliches bonds with Pfandbriefgesetz a volume of EUR sowie 74
das million. Schiffsbankgesetz When we use “benchmark” im Jahr 2005 in auf this sich article, vereinte we und are referring grundlegend to affiliation neu gestaltete. with an Über index.
die Abkehr vom Spezialbankprinzip hinaus wurden weitere Neuerungen wie eine verbesserte
Regulierung der Überdeckungsanforderungen, Transparenzvorschriften des § 28 PfandBG
sowie Anforderungen an das Liquiditätsmanagement der Deckungsmassen in das Gesetz aufgenommen.
Diese Maßnahmen wurden ermöglicht bzw. maßgeblich flankiert durch die Schaffung
der Rolle des Sachwalters im Jahr zuvor, durch den die insolvenzrechtliche Abschottung
der Deckungsmassen perfektioniert wurde.
Im Folgenden werden die praktischen und gesetzlichen Anforderungen an das Deckungsgeschäft
einer Pfandbriefbank im aktuellen regulatorischen Umfeld beschrieben und am Beispiel
einer zentralen Organisation des Deckungswesens gezeigt, wie diesen Anforderungen in
der Praxis Rechnung getragen werden kann.

Pfandbriefe in Securities Indices – Current Trends and Applications
Relevance
Indices naturally do not have the same relevance for all investors when it comes to measuring
performance. In most cases, a yardstick by which performance is measured emerges from a
certain disbursement profile, such as with pension funds or life insurance companies. Here,
the yardstick arises from pension claims and the times at which they can be drawn or from
mortality tables, as well as the guaranteed minimum interest rate. Where bank investors are
involved, performance relative to an index is often an objective that is subordinate to liquidity.
Under this constellation, the resulting performance objective is at most derived from debtservice
costs. For these types of investors, orientation to an index would carry the risk that
while the index might be beaten, the performance objective would not be attained due to outside
payment obligations, which, in a worst-case scenario, could entail severe, existential consequences.
Accordingly, investors who are primarily oriented to external indices are thus not
directly dependent on certain payment models. Traditionally, these have been asset managers
and central banks. In the context of insurance, index-oriented performance measures are normally
to be found primarily with the awarding of special fund mandates.
BUYERS OF COVERED BONDS, BY INVESTOR CLASS
46
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2010 2011
Banks/
financial
institutions
Fund
managers
Central
banks/SSA
Others
Insurance
companies/
pension funds
Sources: Informa, ifr, UniCredit Research
“Bespoke Index” as the General Rule
Particularly for the last two groups, however, there is a question of whether external market
indices represent the correct benchmark for measuring performance. Since the investment
strategy is customarily embedded in a macro strategy, which likewise normally over- or underweights
certain countries in comparison to the overall market, “off-the-rack” indices tend to be
less than optimal for measuring performance. For example, in the case of an investor that, on

account of its macro strategy, has to underweight peripheral European countries, for instance,
orientation to the iBoxx EUR Covered Index leads by definition to a tracking error. In order to
account for this, correct benchmarking is accomplished through individually calculated indices
– which may be composed of sub-indices of an existing index family.
In the following, we will present an overview of select covered bond indices, their composition,
and the most important index rules.
Citigroup Covered Bond Index
Citigroup’s definition of covered bonds covers all Pfandbriefe and covered bonds issued principally
in the Euro region. In 1997, Citigroup introduced the Jumbo Pfandbrief Index. It is a
component of the Euro Broad Investment-Grade (EuroBIG) Index and a part of the Collateralized
sub-category. Citigroup sets the Jumbo criteria for the index, such as minimum volume
of EUR 1 billion, fixed-income coupon, and at least five market makers.
Barclays Covered Bond Indizes
Covered bonds can be found in a number of Barclays indices. For instance, they are contained,
in particular, in the Global Aggregate Bond Index, in which they represented 4.1% of the total
volume as of October 2009, in the Pan-European Aggregate Bond Index, at 10.6%, in the
Sterling Aggregate Bond Index, at 0.4%, in the Asian Pacific Aggregate Bond Index, and in
the aggregated indices U.S. Universal Bond Indices, at 0.2%, and the Pan-European Universal
Index, at 10.4%. The fundamental selection criteria for including bonds in the respective
indices are normally an outstanding minimum volume of EUR 300 million (or GBP 200 million
or USD 300 million), an investment-grade rating, a minimum time to maturity of one year, a
fixed-income coupon, and public placement of the bond.
47
PEX
The Pfandbrief index PEX, which is listed on the Deutsche Börse, consists of 30 characteristic
synthetic Pfandbrief issues having maturities of one to ten years in one-year increments and
with each having coupons of 6%, 7.5%, and 9%. The PEX is calculated using the yields from
transactions entered into by the Pfandbrief issuers or for which they have set rates. In addition,
there are sub-indices for maturities buckets of one to ten years. Each of the characteristic
Pfandbriefe is weighted with its market share. The weighting matrix was ascertained from the
market structures of three interest cycles and is reviewed annually. The overall PEX index is
calculated in three steps: (i) calculation of zero-coupon yields (spot rates) from the reported
yield data, (ii) valuation of 30 synthetic Pfandbriefe with a remaining time to maturity of one
to ten years and of the three coupon classes, and (iii) weighting of these 30 bond prices and
aggregation into the PEX price index. Using the PEX, the PEXP performance index can be
determined, which reflects the value trend of a hypothetical Pfandbrief portfolio with no with-

Pfandbriefe in Securities Indices – Current Trends and Applications
drawal or new investment of money. Following the calculation of the PEX rate index, price
changes and interest earnings are totalled. The reinvestment of interest earnings takes place
across the entire portfolio, i.e. cash flow is allocated to all securities in accordance with constant
weightings.
PEX YIELDS FOR 3, 5, 7, AND 10 YEAR MATURITY BANDS
10
9
8
7
6
5
4
3
2
1
0
3 y 5 y 7 y 10 y
48
12.4.1987
12.4.1989
12.4.1991
12.4.1993
12.4.1995
12.4.1997
12.4.1999
12.4.2001
12.4.2003
12.4.2005
12.4.2007
12.4.2009
Sources: Deutsche Börse, UniCredit Research
iBoxx Indices
The iBoxx-brand family of indices was developed with the aim of establishing benchmarks for
the Euro and Sterling bond markets. The iBoxx € Covered Index is part of the iBoxx € Collateralized
Index (top-level index). Since 2003, iBoxx has set up various covered bond sub-indices.
The criteria for the inclusion of bonds are based on type of bond, rating, remaining time to
maturity, and outstanding volume. In the case of covered bonds, this means an investmentgrade
rating, a remaining time to maturity of at least one year, and an outstanding volume of
(currently) EUR 1 billion. In this regard, covered bonds are defined as bonds that meet the
requirements of UCITS 22.4 or similar directives. In addition, covered bonds may also qualify
if they have a structure that the market perceives as being a typical covered-bond structure.
The criteria taken into account by the Technical Committee are structure, trading patterns,
issuance process, liquidity, and spread levels. Currently, there are covered-bond sub-indices
for Austria, Canada, France (France Covered Legal and France Covered Structured), Germany
(mortgage Pfandbriefe and sovereign Pfandbriefe), Ireland, Italy, the Netherlands, Norway,
Spain (Multi Cedulas and Single Cedulas), Portugal, Sweden, the United Kingdom, and the
U.S. The covered bonds for all other countries are contained in the Other Covered sub-index.
In addition to sub-indices according to country, iBoxx also provides covered-bond indices
according to maturity bands: 1-3 years, 3-5 years, 5-7 years, 7-10 years, and more than 10
years. The subdivision by maturity is provided for iBoxx Covered as well as for the countries
of Germany, France, and Spain. In addition, iBoxx provides sub-indices by ratings category:
iBoxx € Covered AAA, iBoxx € AA, and iBoxx € A. Due to its having numerous sub-indices,
iBoxx Covered achieves a very high degree of detail.

iBoxx COVERED BOND INDICES (JUNE 2011)
10
9
8
7
6
5
4
3
2
1
0
Austria Covered
Canada Covered
France Covered Legal
France Covered Structured
Hypothekenpfandbriefe
Ireland Covered
Italy Covered
Netherlands Covered
Norway Covered
Öffentliche Pfandbriefe
Other Covered
Pooled Cedulas
EUR bn
Portugal Covered
Single Cedulas
Sweden Covered
UK Covered
US Covered
Sources: Deutsche Börse, UniCredit Research
49
iBoxx INDEX FAMILY
iBoxx € Overall (overall and maturity indices)
iBoxx € Sovereigns
iBoxx Non-Sovereigns
iBoxx € Eurozone
iBoxx € Germany
iBoxx € Non-Sovereigns
Rating Indices
iBoxx € France
iBoxx € Italy
iBoxx € Austria
iBoxx € Sub-Sovereigns
iBoxx € Collateralized
iBoxx € Corporates
iBoxx € Belgium
iBoxx € Finland
iBoxx € Greece
iBoxx € Ireland
iBoxx € Netherlands
iBoxx € Portugal
iBoxx € Spain
iBoxx € Sub-Sovereigns
Rating Indices
iBoxx € Supranationals
iBoxx € Agencies
iBoxx € Public Banks
iBoxx Regions
iBoxx Other Sovereigns
iBoxx Other Sub-Sovereigns
iBoxx € Collateralized
Rating indices
iBoxx € Covered
iBoxx € Covered Sub-Indices
iBoxx € Germany
iBoxx € Sub-Indices
iBoxx € Securitized
iBoxx € Other Collateralized
iBoxx € Corporates
Rating Indices
iBoxx € Corporates
Sector Indices
iBoxx € Financials
Rating Indices
iBoxx € Financial
Sub-Indices
iBoxx € Corporates
Market Sector Indices
Sources: iBoxx, UniCredit Research

Pfandbriefe in Securities Indices – Current Trends and Applications
FTSE Index
The FTSE Global Pfandbrief Index provides sub-indices for Germany, Spain, Portugal, France,
Luxembourg, Ireland, Italy, Austria, the United Kingdom, the Netherlands, Sweden, Finland,
and the U.S. As with iBoxx, the level of detail is very high, with sub-categories according to
maturity (1-3 years, 3-5 years, 5-7 years, 7-10 years, more than 10 years) and in the form of
price indices as well as performance indices. Pursuant to the FTSE Index Rules, country indices
are established for Germany as well as other European countries whose covered bonds
have a structure and quality similar to that of the German Pfandbrief and are denominated in
EUR. The outstanding minimum volume for covered bonds is EUR 500 million.
FTSE INDEX FAMILY
FTSE Global Asset Backed Bond Indices
FTSE Pfandbrief Index
50
Austria Pfandbrief Index
Finland Pfandbrief Index
France Pfandbrief Index
Germany Pfandbrief Index
Ireland Pfandbrief Index
Italy Pfandbrief Index
Netherlands Pfandbrief Index
Portugal Pfandbrief Index
Luxembourg Pfandbrief Index
Spain Pfandbrief Index
Sweden Pfandbrief Index
UK Pfandbrief Index
US Pfandbrief Index
Maturity: 1-3, 3-5, 5-7, 7-10, 10+
Sources: FTSE, Bloomberg, UniCredit Research

EuroMTS Index
The EuroMTS Covered Bond Index (EMTXc), established by EuroMTS in 2005, contains Eurodenominated
covered bonds and is compiled from a total of 14 indices. In addition to the
EMTXc Aggregate (all maturity) Index, which contains all covered bonds in the sub-indices,
there are sub-indices for Germany, France, the United Kingdom, Spain, and Ireland. For Germany,
there are two additional sub-indices for maturities (3-5 years, 5-7 years) and two for
different types of cover pools (mortgages, sovereign coverage). For Spain, there is also a subindex
for maturities of 7-10 years. The aggregate index has a history dating back to 2000. In
order to be included in the individual covered-bond indices, covered bonds must be based on
mortgage loans or loans to sovereign debtors, have a fixed-income coupon, be repayable at
final maturity, and be quoted on the MTS platform. The EuroMTS Covered Bond Index also
delivers data on market transparency for the European Mortgage Federation.
STRUCTURE OF THE EMTXC INDEX FAMILY
EMTXc Aggregate (all-maturity)
51
iBoxx EMTXc € Sub-Sovereigns
Aggregate
(3-5 years)
EMTXc Aggregate
(5-7 years)
EMTXc Aggregate
(7-10 years)
EMTXc Germany
(3-5 years)
EMTXc Germany
(5-7 years)
EMTXc Öffentliche
(all-maturity)
EMTXc Hypo
(all-maturity)
iBoxx € Sub-Sovereigns
EMTXc Germany
(all-maturity)
EMTXc France
(all-maturity)
EMTXc UK
(all-maturity)
EMTXc Spain
(all-maturity)
EMTXc Ireland
(all-maturity)
Sources: euroMTS, UniCredit Research

Pfandbriefe in Securities Indices – Current Trends and Applications
Morningstar
The Morningstar European Covered Bond Index is based on UCITS 22(4). In addition, Morningstar
sets the following criteria:
Minimum volume of EUR 1 billion
Minimum remaining time to maturity of one year
However, the index definition shows certain inconsistencies, in that UCITS 22(4) is established
as a criterion while the criterion of a bank-issued bond is softened. The criteria are satisfied if
investors can hold the bank acting in the background liable “in some other way”. This includes
the possibility of using as issuer a securitisation vehicle that is guaranteed by a bank.
MORNINGSTAR INDEX FAMILY
Morningstar European Core Bond Indizes
Eurozone Core Bond
UK Core Bond
52
Eurozone Government
Eurozone Corporate
UK Government
UK Corporate
Eurozone
Covered Bond
Sources: Morningstar, UniCredit Research
eb.rexx
The eb.rexx family of indices depicts the market for fixed-income bonds denominated in Euro
and traded on the Eurex Bonds platform. The index is calculated by the Deutsche Börse. The
eb.rexx indices cover the most liquid bonds from the sovereign bonds (“Government”) segment,
the asset-covered issues (“Collateralized”) segment, as well as the sovereign-guaranteed
bonds (“Sub-Sovereigns”) segment, traded on the Eurex Bonds platform. These fixed-income
securities are aggregated in the eb.rexx Overall index. The indices are further subdivided into
the respective segments Government and Non-Government. The Non-Government segment
basically comprises Jumbo Pfandbriefe issues, sovereign bonds, as well as bonds from other
issuers. It is further subdivided into the segments Collateralized and Sub-Sovereigns. Overall
indices as well as the following maturity buckets are calculated and distributed for any index
involved: 1 month - 1 year, 1.5 – 2.5 years, 2.5 – 5.5 years, 5.5 – 7.5 years, 7.5 – 10.5 years,
5.5 – 10.5 years, and more than 10.5 years. The eb.rexx Jumbo Pfandbriefe index comprises
the 25 most liquid Jumbo Pfandbriefe issues (at most five bonds per issuer) with a remaining
time to maturity 1.5 to 10.5 years. The weight of any issuer in the eb.rexx Jumbo Pfandbriefe
indices is limited to 20% by market capitalisation. The eb.rexx Jumbo Pfandbrief index enjoys
a certain amount of prominence, in that it underlies the largest ETF based on Pfandbriefe.

eb.rexx INDEX FAMILY
eb.rexx Overall (overall and maturity indices)
eb.rexx Government
eb.rexx Non-Government
eb.rexx Government
Germany
eb.rexx Collateralized
eb.rexx sub-Sovereigns
eb.rexx
Money Market
Eurozone
Covered Bond
eb.rexx
Other Government
Eurozone
Covered Bond
Source: UniCredit Research
ETFs as Practical Applications of Indices
A practical application of indices can be found in the use of exchange-traded funds (ETFs).
ETFs based on covered bonds or Pfandbriefe were first set up in 2004 by iShares. Prior to that
point, however, ETFs based on covered bonds occupied no more than a niche status. Currently,
the market consists of six funds with a total volume of approximately EUR 1.8 billion. However,
the market is extremely concentrated. The oldest covered-bond ETF, set up by iShares in 2004,
has a volume of EUR 1.17 billion.
53
MARKETS SHARES OF ETF ISSUERS (ASSETS UNDER MANAGEMENT)
40%
35%
30%
25%
20%
15%
10%
5%
0%
iShares
Lyxor
db x-trackers
Credit Suisse AM
ZKB
UBS Global AM
Comstage
Amundi
Source
ETFlab
EasyETF
Swiss & Global AM
XACT
Others
Source: Blackrock, UniCredit Research

Pfandbriefe in Securities Indices – Current Trends and Applications
OVERVIEW OF COVERED-BOND ETFs
Investment spectrum Name Bloomberg Currency AuM Replication
Germany ISHARES EBREXX JUM PFANDB DE R1JKEX GT EUR 1178 Full*
Germany COMSTAGE ETF IBOXX GERMANY C540 GT EUR 10 Swap**
Germany DB X-TR II IBOXX GERM CV TR XBCT GT EUR 255 Swap
Europe LYXOR ETF EUROMTS CBA ECB FP EUR 119 Swap
Eurozone ISHARES MARKIT IBOXX EU CV B ICOV LN EUR 136 Full
Eurozone ISHARES MARKIT IBOXX EU CV B SCOV LN GBP 121 Full
* Full Replication means actual 1:1 investment in all index components
** Swap-Based Replication is accomplished through the aid of a total-return swap at the fund level
Sources: Bloomberg, UniCredit Research
Particularly Interesting for Smaller Institutional and Large Private Investors
54
Although covered-bond ETFs play a subordinated role in comparison to total market volume,
they nevertheless constitute an attractive investment option, particularly for small institutional
investors and larger private investors. Currently, investors are split roughly into 80% institutional
investors, including, in particular, non-financials, and 20% retail customers. There are
two reasons why smaller insurance companies to date have not invested more heavily in fixedincome
ETFs generally and covered-bond ETF specifically: the fact that these segments in
particular have been seen as forming part of their core expertise, meaning that the preference
has been for direct investment or tightly structured special funds; in addition, the lot sizes that
even smaller insurance companies trade are too extensive as to be able to be depicted in connection
with ETFs.
However, for investors with lot sizes of up to EUR 1 million per order, country-specific
ETFs in particular represent an excellent basis for core-satellite strategies, i.e. the allocation
of a total investment into a highly diversified core investment (“Core”) that should offer a basic
yield with adequate security, and several individual investments (“Satellites”) that reflect the
investor’s specific view of the market. For this reason, country-specific ETFs are particularly
well suited, since they allow a certain pre-selection. This is necessary, because in spite of a
number of efforts – above all, in 2006 – a functioning CDS market for covered bonds never
emerged. Accordingly, even within a core-satellite approach, only a long-only strategy is possible.
Even though it is possible to calculate a hedge ratio of covered bond to senior CDS that is
fair under ratings models, the basic risk and the hedge would have to be continually adjusted.
At the same time, however, using the specific example of the aforementioned covered-bond
ETF, a practicable strategy can be described with a core of Pfandbriefe. Due to shrinking volume
outstanding, a direct investment of small lot sizes in the Pfandbrief market is likely to be
accompanied by less favourable pricing terms. For this reason, a core strategy using ETFs is
highly advisable, particularly for smaller lot sizes. Investments in specific names within the
Pfandbrief segment that go beyond the index weight, or investments in a European context,
would then be characterised as a satellite investment.

The question of the ETF’s replication form reveals both advantages and disadvantages in
the respective structural form. Whereas “full replication” involves an actual investment in all
index components in the respective weightings, “swap-based replication” has to do with a
total-return swap on the basis of the underlying index. Full replication has the advantage of
being clearly structured and independent of any quality fluctuations of the counterparty to the
total-return swap. However, the disadvantage is that, particular with relatively non-liquid index
assets, the net asset value can deviate more significantly from the rate on the exchange. On
the other hand, the total volume of a swap-based replicated ETF is more easily scalable, since
there is no need to move any certificates but rather only adjust the swap’s nominal value.
Summary
Due to their myriad intricacies, indices in the fixed-income market generally and the coveredbond
market specifically play a subordinate role in comparison to equities markets. To begin
with, index affiliation is nearly always based on a defined size and a certain ratings classification
and generally remains in place over the entire period of maturity. This applies in particular
to covered-bond markets, which show relatively low volatility with respect to ratings. New
listings and exclusions, which often occur in equities markets, are rare. While a covered-bond
index status may be of importance for all investor groups from an informational standpoint,
these indices are directly relevant for select investor groups in connection with performance
measurement – including, in particular, asset managers and central banks, as well as specific
investor groups that do not need to take into account an externally mandated disbursement
profile. Since investment strategies in covered bonds are linked to the macro-allocation,
“off-the-rack” global indices are only second-best when compared to individually calculated
indices, which in turn can be comprised of sub-indices of global index families. The direct
application of indices in connection with ETFs continues to lead a shadow existence. Although
the range of options is extremely flexible and cost-efficient, particularly when it comes to coresatellite
strategies, they come with significant restrictions with respect to tradable sizes and
the fact that only long-only strategies can be pursued.
55

Roundtable
Pfandbrief Banks
hosted by Michael Schulz | NORD/LB
56

Cover Ausgehend assets von from einem Eurozone sehr homogenen peripheral Spreadniveau, countries auf das in sich the der cover gesamte pools Covered- of German
Bond-Markt Pfandbrief vor dem banks; Ausbruch the der inclusion Krise eingestellt of commercial hatte, weiteten property sich die loans Renditeaufschläge versus
private der Pfandbriefe mortgages gegen in Swap cover; im fünfjährigen the implications Laufzeitenbereich of Basel nach III for der Lehman-Insolvenz refinancing via auf
Pfandbriefe. maximal rund 70 These Basispunkte are some aus. Das of the erschien topics zum on damaligen investors’ Zeitpunkt minds und at vor the dem moment. Hintergrund,
the round dass die table, Spreads experts aus einem from teils active zweistelligen Pfandbrief Minusbereich issuers kamen, comment für das on Pfand-
these
At
and briefsegment other current durchaus issues. dramatisch. The Im participants Vergleich zu represent den Spreadbewegungen a cross-section in allen of anderen the
entire Segmenten issuer kamen landscape, die Ausweitungen demonstrating jedoch eher the bescheiden great relevance daher. So weiteten of these sich topics spanische
the Cédulas sector und as französische a whole. Covered Bonds auf Niveaus um Swap plus 130 Basispunkte aus,
for
irische ACS explodierten sogar zwischenzeitlich auf Swapspreads von knapp 400 Basispunkten.
Auch gegenüber Länderanleihen und Agencies nahmen sich die Ausweitungen der Pfandbriefspreads
Low margins eher verhalten in public aus. sector Der Spreadverlauf lending and the dieser Basel beiden III regulations Anlageklassen that have lief über been
1. weite Strecken an-nounced parallel are dampening mit dem der this Pfandbriefe; area of business. dass sich What der Renditeabstand are the consequences der gedeckten for
Anleihen public aus sector Deutschland finance as der a Spitze business auf model lediglich – and, rund with 20 Basispunkte that – for Public über Pfandbriefe?
Agencies und
Länderanleihen ausweitete, zeugt unserer Einschätzung nach von der hohen Wertschätzung,
Horst die Investoren Bertram (HB): den Papieren Public sector entgegen lending bringen. based Denn on refinancing schon vor Ausbruch at matching der maturities Krise lagen and a
focus Pfandbriefe on good auf debtors Spreadbasis and stets remains über a Länder- low-margin und business Agency-Bonds, field. Since so dass 2009, letztendlich we have concentrated
Verlauf der on Krisenverschärfung public sector finance nur in eine Germany leichte and Verschlechterung the German-speaking des Sentiments region. hinsichtlich
im
dieser Anlageklasse konstatiert werden musste.
Rafael Die Galuszkiewicz Gründe für diese (RG): doch Banks recht will erfreuliche conduct this Entwicklung business even lagen more vor allem selectively in der and Sichtweise
portfolios der Anleger more auf actively Pfandbriefe in future. per se, Under das the deutsche anticipated Pfandbriefgesetz Basel III requirements und den deutschen and given
manage
their
the Immobilienmarkt need for level 1 begründet. assets, banks Die will Geschichte to a certain des Pfandbriefs, extent continue der to mehr have als ties 240 with Jahre this ohne business
Zahlungsverzögerungen field. It is worth mentioning oder gar that Ausfälle Public die Pfandbriefe Anleger erfreut are held hat, in ließ especially in deren high Köpfen regard by
foreign Gedankenspiele, investors, die despite etwas the anderes debt crisis zum that Ergebnis has hit hätten, Euro-pean schlicht states. nicht zu. Zudem hatte der
deutsche Immobilienmarkt keine gravierenden Probleme, da die (Miet-) Preisentwicklung keine
Bodo Anzeichen Winkler einer (BW): Blasenbildung We withdrew indizierte. from public Auch sector waren lending die Investoren in 2009. überzeugt, Unless adjustments dass auf-argrund
when der systemischen Basel III transposed Relevanz der into Pfandbriefe European law, für den for instance Kapitalmarkt by making und als exceptions Anlageprodukt for
made
low-risk im Rahmen loans der for privaten municipal Altersvorsorge financing when alles calculating getan werden the würde, leverage um ratio, auch we nur cannot den Ausfall envisage
resuming einer einzigen operations Zinszahlung this aus field. einem Given Pfandbrief the borrowing zu verhindern. needs of many Diese local Denkweise authorities erhielt and, Nahrung
the nicht same zuletzt time, banks’ auch durch severely die restricted Bundesregierung, access to die the in capital der Begründung market, it is des imperative Finanzmarkt-
that
at
policymakers stabilisierungsgesetzes realize the eine consequences implizite Staatsgarantie of the leverage für ratio Pfandbriefe for the budgetary aussprach. financing Pfandbriefe of
German wurden zwar public durch authorities; die generell for many negative Pfandbrief Entwicklung banks which des gesamten were able Covered-Bond-Marktes
to fund themselves by
issuing in Sippenhaft Public genommen, Pfandbriefe die are eben likely angeführten to pull out as Aspekte providers verhinderten of finance in jedoch future ein – as stärkeres are other
public Abstürzen sector des financing Segments banks. beziehungsweise ein kräftigeres Nach-Oben-Schießen der Swapspreads.
Dann trat Anfang Mai 2009 die Europäische Zentralbank (EZB) auf den Plan. Nach der
Ankündigung des EZB-Kaufprogramms im Volumen von insgesamt 60 Mrd. Euro (bis Ende Juni
2010) engten sich die Swapspreads der ausstehenden Covered-Bonds drastisch ein – auch
bei Pfandbriefen. Die gedeckten Bonds einiger deutscher Emittenten erreichten auf Swapspreadbasis
bereits wieder Niveaus, auf denen sie sich vor der Krise befanden. Auch die anderen
Segmente entwickelten sich seit Mai des vergangenen Jahres sehr positiv, und der Markt
zeigte eine deutlich ausgeprägtere Differenzierung einzelner Covered-Bond-Produkte – ein
Zustand, der auch mittel- bis langfristig Bestand haben dürfte. Denn wenn die Investoren
57

Roundtable Pfandbrief Banks
2.
The volume of Pfandbriefe has been on the decline for years. How long will this
development continue? What impact will it have on investor behavior?
Tanja Stephan (TS): It is true that the volume of Pfandbriefe has fallen continuously since the
year 2000. As a matter of fact, however, this consolidation has taken place only in the case of
the Public Pfandbrief. Mortgage Pfandbriefe present a different picture: their volume has consistently
been in excess of €220 billion since 1998. Before the financial market crisis, Public
Pfandbriefe were long considered by investors to be a surrogate for government bonds and
were marketed as such. All this has changed. Investors are placing greater emphasis on the
quality and diversification of the cover pools and a balanced management of the cover assets.
Parallel to this development, a number of issuers have made portfolio restructurings and
reductions; this, overall, will lead to a further decrease in public sector cover pools and, consequently,
in Public Pfandbrief issues.
HB: Given the large volume of maturities in formerly government-guaranteed loans to savings
banks and Landesbanken in the coming years, the total volume of Pfandbriefe outstanding is
likely to decline further until the end of 2015.
58
3.
The sovereign debt crisis has brought Public Pfandbrief issuers back into investors’
field of vision. A particularly critical view is held of exposure to peripheral states.
Are foreign cover assets going to disappear from Public Pfandbrief cover pools?
RG: First of all, it needs to be said that investments were made in bonds of the countries
affected – all of which are members of the Eurozone – for reasons of portfolio diversification.
The volumes are correspondingly small in terms of total holdings. The extent to which foreign
cover assets will disappear from public sector cover pools depends on the orientation of each
Pfandbrief bank’s business model.
TS: Every cover pool is a portfolio which has to be actively managed, in particular, from the
point of view of risk, return and liquidity. This makes diversification of credit qualities and
asset classes indispensible. I don’t think there is anything to be gained by restricting by region
the assets that are to qualify as cover; the opposite is probably the case.
4.
Some Pfandbrief issuers are doing away with small-scale property finance. At the
same time, commercial mortgages are subject to greater price fluctuations. What are
the implications for the cover pools?
RG: That statement is true of some, but not all, Pfandbrief issuers. Some have always considered
private residential property finance as their core business. Particularly in the financial
market crisis, this core business and the granular portfolio it entails has proven to be very
sound and sustainable.

Michael Schulz, NordLB; Bodo Winkler, Berlin Hyp; Tanja Stephan, Aareal Bank; Horst Bertram, BayernLB;
Rafael Galuszkiewicz, Münchener Hypothekenbank (from left to right)
BW: If a sizeable volume of house-builders’ loans is still to be found in the cover pools of traditional
mortgage banks, it is either residual holdings or loans that were originated for instance
by respective primary banks of the banking group to which a particular mortgage banks
belongs. Of course, a high level of granularity in the cover pools has a risk-reducing effect.
But granularity is also given when one residential property has many different tenants. The
percentage of apartments for rent in Germany is traditionally high by European comparison,
particularly in large cities. In the case of purely commercial properties, price developments are
more closely correlated to the macroeconomic situation, albeit with considerable regional differences.
What is ultimately important for the Pfandbrief creditor is that the Pfandbrief cover is
sufficient to service all Pfandbriefe outstanding. Moreover, it is worth bearing in mind the markets
in which the latest crisis arose – it was not the German commercial property market.
59
TS: The prime consideration for investors is the stability and sustainability of the Pfandbrief
issuers’ business models. Models with an emphasis either on residential properties or on commercial
properties are both possible and sustainable. It is important that the issuers have the
necessary expertise for their lending activities, supported by modern portfolio management.
This as a whole helps reduce cover pool volatility. The higher volatility in commercial property
finance is already taken into consideration by the calculation of the mortgage lending value,
because the mortgage lending value is determined as the sustainable value of commercial
property, is usually substantially below the market value and is, therefore, also less susceptible
to fluctuation.
5.
Rating or no rating? Rating agencies are placing increasingly greater demands
on overcollateralization as a basis for giving Pfandbriefe a top rating. This leads
to larger shares of expensive, uncovered refinancing. How is this trade-off to be
resolved? Is there an answer to the question of the “right” number of ratings?
TS: Ratings and rating agencies lost much of their credibility during the financial crisis;
this cannot be reversed by changing analysis models and refining rating concepts. From the
Pfandbrief investor’s viewpoint, besides ratings, the transparency of the cover pools makes for
additional confidence. Nevertheless, ratings are at present an indispensable reference point in
the capital market – for issuers, investors and regulators alike. On the whole, more competi-

Roundtable Pfandbrief Banks
tion among the rating agencies would seem necessary. However, it is likely to take many years
before a new agency is established, as it would first have to earn investors’ confidence and be
politically desired.
HB: For Pfandbrief issuers wishing to place Pfandbriefe, there is no alternative to a rating.
Banks which issue Pfandbriefe internationally and on a regular basis are even expected to provide
two ratings. This makes it difficult to arrive at the necessary trade-off.
BW: It is an unfortunate fact that covered bond ratings today depend primarily on the amount
of overcollateralization, and that the quality of the legal framework which regulates covered
bonds plays only a secondary role. After Fitch, in early 2009, downgraded the Pfandbrief ratings
of Pfandbrief banks specializing in commercial property finance to “watch negative”,
we consciously opted for an AA+ rating. But since investors face increasingly more – not less
– regulatory requirements that are based on external ratings, issuers will have to continue having
their Pfandbriefe rated by one of the agencies.
60
6.
Investors suspect that a new bubble will result from real estate finance providers
changing their business strategy to make commercial real estate their new core
business. How will the trade-off between secured income and greater risk as well as
stronger pressure on margins be reached?
TS: For us, international commercial property finance is not a new core business field, but one
we have engaged in for 20 years. Wide regional diversification substantially reduces dependence
on individual real estate cycles and allows Pfandbrief investors to invest in a professionally
managed International property portfolio.
BW: For many years now, we have regarded commercial property finance – alongside credit
for housing associations and cooperatives to finance multi-family dwellings – as our core
business. In the past years, well over 90% of our new lending activities have at all times been
categorized in the risk classes 1-7 of the DSGV master scale. Put simply, this is equivalent to
the school grades “very good” and “good”. A conservative risk profile will remain our leitmotif
in the future.
7.
Exactly what constitutes the “right” mortgage lending value was the subject of
debate, particularly before the financial market crisis. In many European countries,
mortgage lending limits sometimes clearly above 60% are permitted. What is more,
these are often based on the market value rather than the mortgage lending value,
the measure commonly used in Germany. Can raising the mortgage lending limit be
justified? How high should it be for commercial loans and private mortgages?
RG: Thanks not least to the conservative valuation approach applied, the Pfandbrief is the
highest-quality product in the covered bond world. Given the proven low risk provisioning in
the housing finance business, a higher mortgage lending value would be justifiable; investors
would still recognize the high quality of the Pfandbrief.

BW: The German mortgage lending value concept is not sufficiently appreciated by the rating
agencies or by many investors, even though additional overcollateralization is implicitly furnished
by applying the mortgage lending value. In dialog with investors, particularly outside
Germany, we spend much of our time explaining the mortgage lending value – as no doubt
other issuers do. We feel very comfortable with the mortgage lending value of 60%, which has
been in place for many years now.
8.
Information and transparency are demands that investors have put forward in recent
months. Is the information required under section 28 of the Pfandbrief Act sufficient
as a means of analyzing the strengths and weaknesses of the cover pool of a Pfandbrief?
What is your view on requirements drawn up in spring up by the Covered
Bond Investor Council (CBIC)? Are they realistic?
HB: In terms of providing information, German issuers lead the way in Europe because of the
reporting requirements legally stipulated in section 28. Generally speaking, extensive transparency
requirements such as those called for by the CBIC, for instance, are to be welcomed.
German issuers will discuss intensively about the areas in which more high-quality information
can meaningfully be offered to investors. This might be done by individual banks furnishing
voluntary information, by supplementing the reports required under section 28 with a voluntary
part, or by extending the statutory transparency requirements.
61
RG: A high degree of transparency and the regular provision of information are, generally
speaking, useful. However, it should be remembered that the banks’ business models are not
homogeneous, thus making it difficult to compare in a consistent manner issuers and their
cover pools with the help of additional data – particularly as cover pools are quite static when
viewed over the short term, so that significant changes to the collateral are usually not discernible.
From speaking with investors, we see that they very rarely ask questions concerning
the cover pools that go beyond the data disclosed under section 28 of the Pfandbrief Act.
9.
When analyzing the data required under section 28, investors quickly find that there
are limits to the comparability of the information furnished. The legal provisions
offer a good guideline for uniform disclosure; however, there is a clear need for harmonization,
for example with regard to reporting substitute cover. Is uniform presentation
realistic? What additional information should be published on a selective
basis?
BW: In my opinion, the statutory requirements pursuant to section 28 of the Pfandbrief Act still
constitute the benchmark in Europe in terms of providing cover pool data. Where else do you
find legal provisions which stipulate that detailed information on the structure of cover pools
must be provided at regular intervals? What is more, the vdp has, with its transparency initiative,
committed to a broad-based common understanding of and uniform definitions for cover
pool reports. To heighten the comparability of cover pool data, therefore, one should instead
consider information which exceeds the scope of the current requirements under section 28.

Roundtable Pfandbrief Banks
For instance, issuers could provide information on currency shares, on the share of fixed- and
variable-rate loans, or on the percentage of a cover pool accounted for by the five or 10 largest
borrowers.
HB: The uniform presentation of, say, substitute cover should be possible without any great
difficulty. The vdp working group has already made gratifying progress in this respect.
10.
The financial market crisis prompted investors to give preference to domestic
bonds over bonds of other countries. What is your impression of investor
behavior at present? How strong is foreign investors’ interest in the Pfandbrief?
TS: Since the financial market crisis, investors have taken an extremely close look at the individual
issuers, examining thoroughly the underlying business models and making a detailed
analysis of balance sheets. On the whole, foreign investors’ interest in the Pfandbrief has
grown throughout the course of the financial market crisis because they have confidence in the
quality of our product. On the other hand, German investors seeking higher returns have again
featured more strongly in the order books for foreign covered bond issues of late. Here, less
attention is paid to the risk aspects that result from softer legal requirements.
62
RG: For more than a year now we have seen a steady rise in foreign investors – in both former
and new investors. However, the interest shown by foreign investors is limited almost exclusively
to Jumbo-format issues.
11.
What investors want most of all is for extensive information to be provided quickly.
How can investor relations improve in future?
BW: In almost all of Europe, one can in the meantime find covered bond legislations or covered
bonds which are issued on the basis of contractual agreements. There is hardly a major
European bank today which is not a covered bond issuer. Competition has grown, and good
investor relations work has to show investors that it makes sense to invest in the issues of that
particular bank. Issuing banks which are not prepared to visit investors and address their questions
will fall behind in the competition for investors, or they will only be able to operate in
niche markets. Where investor relations can do more depends on what the individual issuers
are already doing in IR.
HB: Generally speaking, some information could be provided faster and more frequently. In the
end, every bank seeking to place capital market instruments has to comply with the best practice
standards of leading listed banks.

What, in your opinion, will investors be focusing
12. on in the months ahead?
RG: Investors attach particular importance to a sound and sustainable business model. As well
as the composition and dynamic nature of the cover pools, investors’ interest will continue, as
in the past, to focus on this aspect.
TS: Investors are examining the business models of banks in general and of Pfandbrief issuers
in particular, and are calling for details on the stability and sustainability of each bank’s business
strategy. Furthermore, the consequences of regulatory initiatives such as Basel III and
Solvency II are becoming more and more of an issue. Last but not least, the future development
of the sovereign debt crisis and its implications for other fixed-income asset classes is a
topic that will stay with us for years to come. For that reason more than any other, Pfandbriefe,
embedded both in a strong legal framework and in the sound business model of each issuer,
will continue to be a safe investment that will remain in the focus of investor interest.
63

The German Property
Market – Guaranteeing the
Sustained Value of
Mortgage Pfandbriefe
Susanne Giesemann, Christoph Kettel | Eurohypo AG
64

The fallout of the financial and economic crisis played a considerable part
in the recent success story of the Mortgage Pfandbrief, long decried as
boring. In view of the current increase in investors’ risk awareness, however,
the Pfandbrief is held in high esteem not just as a sound and favorably
priced refinancing instrument for the issuing financial institutions
but also as an investment product with a stable value. The attraction can
be explained not only by the statutory requirements that govern the issuance
of Pfandbriefe and the determination of the mortgage lending value
(MLV): particularly in downswing phases, it is above all the sustained
value of the cover pools that convinces. A closer look at the German property
market – by international comparison and in terms of the development
of individual market segments – testifies to the attractiveness of this
debt instrument. After all, German properties account for around 80% of
the cover for Mortgage Pfandbriefe.
The current trend in transaction activity reflects the appeal of the German property market
beyond Germany’s national borders. Investment volume in 2010 was twice that of the previous
year, and is returning to the level recorded before the exceptional boom years of 2006-2007
as a long-term average. Besides London and Paris, mainly German conurbations are again
attracting more and more foreign investors.
65
Property Transaction Volumes in Germany
70
Investment volume (in € billion)
60
50
40
30
20
10
0
2005 2006 2007 2008 2009 2010
Source: BNP Paribas
What makes direct investment in German properties attractive also benefits, indirectly, the
Mortgage Pfandbrief given the high percentage of German collateral in the cover pools for
Mortgage Pfandbriefe. Besides the strong economic upswing and the robust labor market,
which appears to have emerged from the crisis virtually unscathed, it is in particular because
of market participants’ re-appraisal of risk-return ratios that Germany is seen in a very positive
light by international comparison.

The German Property Market – Guaranteeing the Sustained Value of Mortgage Pfandbriefe
Low Structural Risk by International Comparison
Germany belongs to a small group of markets worldwide which exhibit very low risk potential
for medium to long-term property investments. This is borne out by the annually updated
Eurohypo Real Estate Appraisal & Consulting (RAC) property market ranking* which, based on
a dataset containing macroeconomic and property-related determinants, identifies long-term
structural risks and condenses them into a risk ratio (country score).
Structural Risks of National Property Markets: a Global Comparison
66
Country score
1
2
3
4
5
6
7
8
9
10
Country score 1 = property market with very low structural risk; 10 = property market with very high structural risk
Source: Eurohypo RAC Research
Since the ranking was first compiled in 2005, Germany has held one of the top places, with a
country score of 2 (meaning the structural risk is particularly low). Besides the appeal of the
market (market size, wealth, etc.) the main points in Germany’s favor are political, legal and
fiscal stability. The freedom offered in a market economy, legal certainty and market transparency
ensure that cross-border investments are characterized by investor-friendly market entry
conditions and costs in every market phase. Efficient market mechanisms and a diversified
economic structure guarantee that, after phases of cyclical downswing, economic expansionary
forces again become broad based. Moreover, the financial crisis showed that Germany has
efficient public institutions in place which are able to identify systemic risk both quickly and
purposefully, and to curb systemic risk by way of concerted crisis management (e.g. bank res-
* In terms of the information it provides, methodological procedure as well as the selection and weighting of relevant criteria,
the Eurohypo RAC property market ranking is heavily modeled on the Property and Market Rating concept of the European Group
of Valuers’ Associations TEGoVA.

cue fund, first and second economic stimulus packages). Via direct (e.g. infrastructure investment)
and indirect (e.g. avoidance of capital bottlenecks by giving support to banks) transmission
channels, this reduces on a lasting basis the danger that property investments might lose
their value – as the following examination of changes in market values shows.
Stable Performance
Back in the days when investment decisions focused mainly on earnings potential, the stable
performance of German commercial properties was considered a shortcoming. This view
has now been relativized given the return to greater risk awareness which downturns usually
produce.
The importance of the German property market as a safe investment haven had already
been demonstrated most impressively during earlier recessions.
Development of Market Values in Established Markets: a Comparison over Time
(Downswing Phases)
110
100
67
90
Index
80
70
60
50
40
Germany Great Britain France Spain
USA
4 8 12 16 20 24
4 8 12 16 20 24 4 8 12 16 20 24 4 8 12 16 20 24 4 8 12 16 20 24
Quarters
Beginning approx. 1990 Beginning approx. 1st half-year 2011 Beginning approx. end 2007
No robust time series were available for the USA for the first partial cycle beginning in 1990.
Sources: Eurohypo RAC Research, realtors
The chart allows us to make a direct comparison over the last three downturn phases in
terms of duration (in quarters), course and intensity of valuation adjustments in the countries
selected. A downturn phase represents the time between the first and last quarter showing a
persistently negative performance. In the case of the current cycle, the phase ends at the latest
at the end of the time series in the fourth quarter of 2010. In Spain, therefore, valuation adjustments
have not yet bottomed out.

The German Property Market – Guaranteeing the Sustained Value of Mortgage Pfandbriefe
In the eyes of risk-averse property investors or investors in Mortgage Pfandbriefe, Germany
benefits from a number of positive factors:
Aggregated for Germany as a whole, losses in the value of commercial properties have
consistently stayed well below 40%. Indeed, in the current crisis, valuation corrections
amounted to less than 20%, which is by far the lowest figure compared with peer markets.
Based on the conservative rule which applies to the determination of the MLV (market
value = upper limit of the MLV), cover for Pfandbriefe in the form of mortgages was not at
risk at any time (for more about the relationship between market value and MLV, see the
box below). In terms of the sustainability of value, then, the market must be regarded as
very safe.
Unlike the other four established property markets (above), in Germany all three downturns
are very similar with regard to the need for write-downs and the course of events
– irrespective of what caused the individual downturns (i.e. whether they were driven by
events on the property market, or not).
From the investor’s viewpoint the German market has, moreover, shown itself to possess a
high level of predictability. Above all, this is attributable to the low volatility of the German
rental markets and the sustained action by market players. This is confirmed, yet again, by
latest developments in individual commercial property segments.
68
Mortgage Lending Value Creates Security
Whereas the market value on a given date usually serves as the basis for an investment decision,
the mortgage lending value (MLV) of a property – which takes its bearings from the
entire life of the loan – is the basis for the refinancing of loans by issuing Mortgage Pfandbriefe.
Thus, the MLV is a stable value in the long term: market fluctuations, particularly downswings,
should already be factored into the MLV. The general rule is that the MLV must not
exceed the market value.
The market value and the MLV are calculated using the same method, but differ greatly in
terms of the underlying assumptions. German law prescribes certain restrictions when determining
the MLV which are intended to take into account the safety aspect of the Pfandbrief as
an investment eligible for trusts. In the case of income properties, for instance, only a rental
income that any property owner would be able to generate on a lasting basis may be taken
into consideration. Furthermore, regulatory limits apply to certain valuation parameters, e.g.
minimum amounts for operating expenses, bands for the useful life of a building and lower
limits for capitalization rates; moreover, haircuts have to be complied with when using the
asset value method or the comparable method of valuation.
Through the concept of the MLV, which is based on permanent features of the property, it
is possible in principle to cushion even fluctuations such as those seen in the last crisis without
affecting the calculation of cover. Even in exceptional cases in highly volatile markets, a
50% loss in the market value would not affect the senior tranches of mortgages that serve as
collateral for Pfandbriefe. If, however, a severe slump in prices were to raise the possibility of
losses, the MLV must be adjusted accordingly for cover calculation purposes.
Mortgage lending values are calculated by valuers who are required to furnish proof that
they are specially qualified to carry out the determination of the MLV. In this way, it is assured
that the high demands placed on the valuation, and therefore on the quality of the Pfandbrief,
are met at all times when the MLV is determined.

Latest Developments on the Rental Markets
Office Markets in Germany
The German office centers are increasingly benefiting from the economic upturn, and in turn
are helping to rekindle the interest of international investors. Whereas in 2010, rental income
already rose perceptibly compared with the previous year (albeit from a low level), vacancy levels,
too, appeared to have reached a turning point at the beginning of 2011. Among Germany’s
major office markets, Frankfurt continues to report by far the highest vacancy rate. However,
vacancies should be gradually reduced as a result of the ongoing rise in turnover of floor space
combined with low new construction volumes.
Despite Germany’s strong economic growth, given the slump suffered and the uncertainty
which still persists in the wake of the financial and economic crisis, only a subdued improvement
is to be expected on the rental markets. A broad-based upturn on the German office markets
is not anticipated until the second half of 2012 at the earliest.
Office Market Situation and 12-month Trend
Berlin
Düsseldorf
Frankfurt
Hamburg
Cologne
Leipzig
Munich
Stuttgart
69
Landlords’
market
Tenants’ market
Source: Eurohypo RAC Research
Thus, office markets will on the whole remain tenants’ markets in the current year. A broadbased
increase in rents cannot yet be expected, as supply is still high. Letting activity will
probably continue to be strongly driven by office space optimization. This means that it will be
very difficult to market older, inefficient properties which no longer meet modern standards.
By contrast, modern office premises will remain in demand. Because supply shortages arise
most quickly in prime properties in A1 locations, peak rents will rise slightly in some places.
On balance, the current year is likely to see a trend of polarization in the market, with modern
properties in prime locations on the one hand and suboptimal properties in secondary submarkets
on the other.

The German Property Market – Guaranteeing the Sustained Value of Mortgage Pfandbriefe
Turnover and Vacancy Rate in German Office Centers
Thous. sq.ms
4,000
Turnover; aggregated (left-hand scale)
Vacancy rate; weighted (right-hand scale)
%
12
3,000
10
2,000
8
1,000
6
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
4
70
Sources: Eurohypo RAC Research, realtors
Retail
By international comparison, the German retail sector has come through the crisis in relatively
good shape, although retailers in Germany also suffered lost sales. The two main factors which
have shored up purchasing power and so benefited the retail market are that consumers are,
on average, not burdened by excessive debt, and that the labor market has remained stable.
The cyclical growth forces, too, are clearly above the European average, as is clearly reflected
in consumer confidence, which picked up of late.
Consumer Confidence and Retail Sales (Real)
Index
15
Index
108
106
10
104
5
0
102
100
98
96
-5
94
03.2003
03.2004
03.2005
03.2006
03.2007
03.2008
03.2009
03.2010
03.2011
01.2003
01.2004
01.2005
01.2006
01.2007
01.2008
01.2009
01.2010
01.2011
Sources: Datastream, GfK

Driven by such healthy fundamentals, demand for retail premises in prime locations by, above
all, successful international textile chains has been consistently high in recent years. Moreover,
these retailers will continue to pursue their expansion objectives. Germany offers a wide range
of opportunities for expansion thanks to the enlarged downtown locations, an abundance of
attractive shopping centers and the country’s decentralized settlement pattern.
The short supply of highly sought-after A1 downtown locations and the persistently strong
demand for such premises leads to steady – or even a slight increase in – prime rents. Outside
of such top locations, however, it is relatively difficult to re-let or to lower the vacancy rate,
which puts pressure on rents. With new projects in the pipeline, the trend of downtown shopping
centers seems to be unbroken.
Already in 2010, safety-minded investor groups in particular were again focusing more
strongly on the German retail property market, and the volume of transactions involving retail
properties even exceeded that for offices. But investors are no longer concentrating exclusively
on absolute core properties; they are also looking for real estate in good locations and
with shorter lease terms or low vacancy levels. This positive trend is likely to continue in 2011,
which should lead to yields falling further in the short to medium term.
Hotels
The hotel sector is highly dependent on the general economic setting. For this reason, it suffered
a severe slump also in Germany during the financial and economic crisis. Particularly the
higher class hotel segment and airport hotels were negatively impacted, above all, by the fall
in foreign guest numbers and cutbacks in business travel. Nevertheless, it has to be stressed
that the decline in business was less pronounced for hotels in Germany than in other European
countries.
Due to the prevalence of small and medium-sized enterprises in Germany and the fact that
German trade and industry is firmly rooted in the eurozone, paired with the value added tax
decrease for the hotel sector from 19% to 7%, German hotels in 2010 benefited to an aboveaverage
extent from the economic upturn. Overall, more overnight stays were recorded than
at any time since German reunification. Above all, the number of foreign guests and business
travelers rose again perceptibly. Despite the increase in accommodation available, this had
a positive effect on bed occupancy rates, which rose by 5.8% for Germany as a whole. This
upbeat development was observed for both the average room rate (ARR) and the average revenue
per available room (RevPAR). The ARR was up by 12.6 % and the RevPAR by 19.1%; with
that, the RevPAR was well above the average for Europe (+9.9%).
This positive trend attracted investors back to the German hotel market, especially in the
fourth quarter of 2010. Compared with 2009, the transaction volume in 2010 almost doubled,
with capital-strong investors and self users predominating. Foreign investors accounted for
roughly 50% of investment activity.
71

The German Property Market – Guaranteeing the Sustained Value of Mortgage Pfandbriefe
Change in RevPAR: 2010 against 2009
%
30
20
2010
2009
10
0
-10
-20
-30
Berlin
Düsseldorf
Frankfurt
Hamburg
Cologne
Leipzig
Munich
Stuttgart
Sources: Eurohypo RAC Research, German Hotel Association (IHA)
72
The transaction volume is expected to rise further during the course of 2011 to close to precrisis
levels. The positive trend in the number of visitors and room occupancy figures is likewise
expected to continue, meaning an increase in room occupancy and revenue per available
room.
Logistics
The logistics sector was badly hit by the economic crisis. Nevertheless, the effects felt by this
segment of the property market were limited because of the, on the whole, low level of speculative
construction activity, as a result of which there were no significant surplus capacities.
Tailored projects for self users or property investors account for most of development activity.
Furthermore, the retail trade, which came through the crisis relatively unscathed, continued to
buoy up demand. As a result, the supply of available premises during the crisis was only moderate.
Also in times of crisis, rent levels have proven to be largely stable, particularly where
new, high-quality properties are concerned, as they take their bearings from the actual construction
costs as well as potential sales proceeds; for this reason, they are largely free from
speculative or strongly cyclical elements.
During the course of the unexpectedly strong economic recovery, user demand for logistics
properties rose discernibly and in 2010 even led to a new record turnover level. This more
than made up for the losses sustained in the years 2008 and 2009. As in the past, users’ interest
is focused on high-quality and efficient properties; however, as demand becomes more
broad-based, interest when selecting possible premises is also being shown in non-prime locations
and qualities. Any rent increase will probably be very moderate, however, all the more as
decreasing returns paired with largely unchanged production costs are again giving developers
more scope when negotiating rents.
Over the past decade, logistics properties have established themselves as an alternative
to investment in office or retail properties. Accompanied by receding returns, the price level
for logistics properties has seen a trend increase. During the financial crisis, too, returns no
longer reached the long-term level. The corresponding decline in market value was less than
10%. During the course of the recovery, returns were already falling again in 2010, and this
trend is likely to continue in 2011. The stimulus needed for this is provided by the high economic
growth expectations for Germany.

Residential Properties
The German residential property market proved to be a haven of stability over the last decade.
After the “reunification-driven boom” was corrected, the development in rents and prices
fluctuated little – although trends differed regionally. Unlike most foreign markets, during the
financial and economic crisis the German market benefited from the long-term fixed-rate mortgage
loans that are customarily granted in Germany and so rule out, for the home-owner, the
impact of short-term interest rate fluctuations. Thus, there is no procyclical impact.
In the meantime, there are increasing positive signs for the German residential property
market; purchase prices and rents edged up slightly in 2010. The main reasons for this were
the favorable situation on the labor market and the attendant income security. Home ownership
is seen as a crisis-proof investment while offering both protection against inflation and old
age provisioning. Thus, this positive trend gained in breadth last year, after it had initially been
discernible in the case of high-quality properties and new buildings in large cities.
Price Index for Owner Occupied Housing
108
106
73
Index 2003 = 100
104
102
100
98
2003 2004
2005 2006 2007 2008 2009 2010
Source: vdpResearch
At the same time, the downward trend in building permits which had persisted for a number
of years came to a halt, and is currently rising slightly. However, the market is not likely to be
burdened by a growing number of completed residential properties as a result. The only minor
increase in construction activity is concentrated in urban areas and primarily addresses the
high demand for modern, energy-efficient dwellings. Potential owner occupiers alone are not
generating demand, however. Demand from tenants is also on the rise.
This, on the whole, positive trend will continue in 2011 and subsequent years in view of
demographic developments. Although population numbers are falling, the number of households
is set to climb further. This, together with the ongoing net migration, will stimulate
demand for dwellings in urban concentrations, whereas demand will stagnate in many rural
areas.

Regulation of rating agencies:
Time for new priorities?
Sascha Kullig | Association of German Pfandbrief Banks
Horst Bertram | BayernLB
74

It is time for new priorities in the regulation of rating agencies in the
European Union. Clear rules for rating agencies’ communications with
market participants and greater transparency on the part of agencies
with respect to the models they use are needed in particular. Currently,
the significance of external ratings for regulatory purposes is also being
scrutinized.
According to the authors, if satisfactory answers to these questions cannot
be found, the approach adopted by the regulators of not interfering
in the methodologies used by the agencies would have to be brought into
question.
Purpose and Objectives of Regulation
The crisis in the financial markets was a key factor in the decision also to introduce mandatory
licensing and supervision of rating agencies in Europe. This was accomplished by Regulation
(EC) No. 1060/2009 governing the regulation of rating agencies, which entered into force in
September 2009.
It has been noted that rating agencies were partially responsible for the onset of the crisis
in the financial markets, charging that they had issued inappropriately high ratings for structured
financial products. The main reason for this, it is alleged, is that the agencies have a
conflict of interest, in that they receive payments from the very companies they analyse. As a
result, the agencies would have a vested interest in issuing the best possible credit ratings.
75
Avoiding Conflicts of Interest
The fact that the Regulation has only been in existence for a short time explains why politicians
and supervisory authorities targeted only a few goals in regulating rating agencies. Their
priorities included improving the quality of the ratings by avoiding conflicts of interest or at
least in disclosing these, if they were unavoidable. Hence, most of the regulatory requirements
in the Regulation are related to the business model and the way the rating agencies are organised.
In addition, the agencies’ registration requirements have become very comprehensive.
Greater Transparency and Greater Competition
Another goal in adopting the Regulation was to increase the transparency of rating agencies.
Among other things, rating companies are required to make their methods, models and
assumptions more transparent and publish extensive historical default rates, for example.
Ultimately, European regulators had intended for Regulation to improve competition. In fact,
the three major agencies, Fitch, Moody’s and Standard & Poor’s (S&P), continue to form an
oligopoly with no real competition. Originally, the first revision of the Regulation governing
rating agencies also focused on promoting competition. The EU Commission’s draft version
stipulated that issuers or originators of securitisations should be required to upload all of the
information they have provided to a rating agency commissioned by them onto a password-

Regulation of rating agencies: Time for new priorities?
protected website. Other agencies not engaged by them should then (as long as they meet
certain requirements) be given access to this website. The purpose of this procedure was to
prevent “rating shopping” for structured financial products – a practice that previously was
not uncommon. This would have created a level playing field with the USA, where a very similar
regulation was passed at the end of 2009.
However, the final amendment to the Regulation governing rating agencies was passed
without this reform. The amendment to the Regulation that entered into force on 1 June
2011 essentially retained only the transfer of regulatory authority from the national supervisory
authorities in Europe to the newly created European Securities and Markets Authority
(ESMA).
Practical Experience and the Need for Reform
76
The Regulation has far-reaching administrative ramifications for the rating agencies, not least
because of the comprehensive organisational requirements. Has anything changed for issuers,
as well? The agencies have grown more conservative in their assumptions and at the
same time, more pro-active in communicating. Fitch, Moody’s and S&P have tightened their
assumptions and stress scenarios several times since the onset of the financial crisis. Toughening
certain assumptions was an almost compulsory reaction to the experiences acquired
from the crisis in the financial markets. Understandably, the agencies do not wish to be criticised
once again for reacting too late.
Premature Rating Measures and Announcements
In many respects, however, the agencies’ actions have produced some strange phenomena.
For example, they appear to want to publish announcements about upcoming changes in
methods and/or models and the potential impact of these on Pfandbriefe particularly early.
In 2009, S&P published a draft of its new covered bond rating methodology and announced
that approximately 68% of all outstanding covered bonds could be negatively affected by the
planned changes. This news caused a great deal of anxiety in the covered bond market. When
the final version of the new method was published nearly a year later and several months after
that the review of the outstanding covered bond ratings had been completed, it turned out that
far fewer covered bonds were affected by the negative rating measures. The agency can be
credited with some issuers having taken steps to optimise their collateral in order to maintain
the desired (generally triple-A) rating.
The rating agency Fitch stated in an October 2009 press release that it was placing nine
Mortgage Pfandbriefe, with cover pools consisting mainly of commercial property loans,
on the watch list. It justified this action by announcing that it wanted to test its commercial
property financing risk assumptions. Only in May 2010 did Fitch publish a paper intended to

explain the new assumptions and the model now being used. Are the agencies acting too early
and unnecessarily unsettling market participants, or do their activities comply with the applicable
rules? The agencies are required by Article 8, paragraph 6 of the EU Regulation to make
a public announcement if they change their methodologies or models. In addition, they must
announce how many ratings they expect to be affected by the changes.
Making Consultations Mandatory
Clearly, there are varying interpretations of the Regulation’s wording concerning the correct
timing of announcements. From the issuer’s point of view, an agency should not already implement
rating measures or announce possible measures if it has only just begun to consider
changes to the underlying methodology or the models being used. The previous examples suggest
that the agencies see things differently. Therefore, the Regulation should clearly state that
a rating agency may make an announcement only if its internal deliberations have moved far
enough along that they can be disclosed to market participants.
Likewise, the Regulation should stipulate that agencies need to give interested market participants
an opportunity to comment before definitively implementing new methods or models.
This would, for example, enable investors to contribute, thereby avoiding misunderstandings.
In addition, this would give market players time to adjust to the reforms.
Increasing the Transparency of the Models Used
In terms of rating agency transparency, the Regulation needs to be amended, too. Although
the existing Regulation contains a series of rating agency transparency requirements, one
thing has not changed in the process: the methodologies and especially the models used are
not logically or consistently comprehensible to third parties, i.e. to issuers, investors and other
market participants; plausibility tests are virtually impossible using the general model descriptions
given. This means that one of the main objectives of the Regulation has not been fully
accomplished so far.
Naturally, rating agencies are reluctant to fully disclose their models, as they do not wish to
divulge their know-how; moreover, they are afraid of losing contracts. Nevertheless, investors
and issuers have a right to know how the models work. Which detailed assumptions are used?
How do these assumptions affect the model’s calculations? How are certain data incorporated
into the models? For example, knowing the simulated default probabilities of cover assets
would be critical in analysing Pfandbriefe. What kind of default histories for cover assets are
used by the agency? What are the assumptions based on?
For issuers and investors, more detailed disclosure requirements for the rating agencies
would be desirable. Investors will only be in a position to reach an informed opinion if they are
able to understand how a rating was arrived at. At the same time, they can draw conclusions
for their own analyses based on the identified strengths and weaknesses of individual methodologies
and models, thereby becoming less dependent on the rating agencies’ assessments.
77

Regulation of rating agencies: Time for new priorities?
Future target rating to remain AAA/Aaa
Michael Schulz, NordLB
78
A few years ago, there was an unspoken rule that “Covered bonds are rated AAA/Aaa and
therefore are held in unqualified high regard by investors”. However, in view of current ratings
for public and mortgage covered bonds, this rule no longer applies to all jurisdictions.
While ratings of German Pfandbriefe by the three major rating agencies, Fitch, Moody’s and
Standard & Poor’s, have not changed substantially since June 2010, ratings for covered bonds
from Portugal, Ireland and Spain have dropped sharply in some cases over the last 12 months.
Whereas outstanding benchmark issues of Irish banks (with few exceptions) still stood at AAA/
Aaa at the beginning of June 2010, only two programmes still hold the top rating, each from
a different rating agency. The ratings trend in Portugal has been far more dramatic. A year
ago, all covered bond programmes (benchmark issues) still had a AAA/Aaa rating from at least
one agency. Not a single Portuguese bank could still make that claim at the beginning of June
2011. In the interim, ratings for Obrigações Hipotecárias and Obrigações Sector Público have
been downgraded by up to eight notches, in some cases.
However, it is no coincidence that covered bond ratings in Portugal, Ireland and Spain are
facing more and more pressure. Now that Standard & Poor’s also links issuer ratings and bond
ratings, ratings of covered bonds by all three of the major agencies depend indirectly on the
issuing bank’s rating. Thus, if the bank is downgraded, triggered for example by a deteriora-
Public Sector EUR Benchmark Covered Bonds
(As at 30 June 2011)
Mortgage EUR Benchmark Covered Bonds
(As at 30 June 2011)
30
70
25
60
Number of ratings
20
15
10
Number of ratings
50
40
30
20
5
0
AAA/Aaa
AA+/Aa1
AA/Aa2
AA-/Aa3
A+/A1
A/A2
A-/A3
BBB+/Baa1
BBB/Baa2
BBB/Baa3
BB+/Ba1
BB/Ba2
BB-/Ba3
AAA/Aaa
AA+/Aa1
AA/Aa2
AA-/Aa3
A+/A1
A/A2
A-/A3
BBB+/Baa1
BBB/Baa2
BBB/Baa3
BB+/Ba1
BB/Ba2
BB-/Ba3
10
0
Fitch Moody's SAP Fitch Moody's SAP
Source: NORD/LB Fixed Income Research

tion in the industry outlook in one country, the covered bond ratings are automatically at risk.
Therefore, in addition to a “negative outlook”, being placed on the “negative watch list” serves
as another warning sign of a possible downgrade. It is therefore worth keeping an eye on the
rating outlook.
Of the benchmark issuers with benchmark transactions rated by Fitch, as many as 13%
were valued as having a negative outlook at the end of June 2011. Moody’s and S&P also
awarded a “negative outlook” to 42% and 48%, respectively, of the benchmark issuers they
analysed.
The ratings carousel will continue to turn in the months to come. Further downgrades should
be expected, particularly in the Portuguese, Irish, Greek and Spanish banking sectors. Due to
the aforementioned link to the respective ratings on their unsecured bonds, the covered bond
issuers in question will not be able to protect themselves from a downgrade of their covered
bonds. In our view, investors will keep this in mind even if expected rating downgrades lead
to wider and wider spreads. In addition, examples of individual issuers demonstrate that good
covered bond programmes do not necessarily need top ratings in order to enjoy robust investor
demand. Nevertheless, in the future issuers will continue to make efforts to achieve an
AAA/Aaa rating. Currently, by far the majority of benchmark transactions in the covered bond
market enjoy the top AAA/Aaa rating.
At the end of June 2011, 96%, 77% and 83% of public-sector covered bonds were given
top ratings by Fitch, Moody’s and S&P’s, respectively, along with 71%, 65% and 82% for
mortgage covered bonds.
79
Benchmark Issuer Ratings
(As at 30 June 2011)
30
25
Number of ratings
20
15
10
5
AAA/Aaa
AA+/Aa1
AA/Aa2
AA-/Aa3
A+/A1
A/A2
A-/A3
BBB+/Baa1
BBB/Baa2
BBB/Baa3
BB+/Ba1
BB/Ba2
BB-/Ba3
0
Fitch Moody's SAP

Regulation of rating agencies: Time for new priorities?
Accepting External Ratings of Other Agencies
The agencies’ refusal to recognise external ratings by other rating agencies has been criticised.
Take derivatives, for example. Derivatives for hedging interest-rate and exchange-rate
risk on Pfandbriefe and the corresponding cover assets are recognised by the agencies only if
the derivative partner also has a rating from the relevant agency. At a time when many banks
no longer receive ratings from all three rating agencies, not least because of cost considerations,
this requirement soon proves to be a hindrance.
Moreover, the agencies require what is known as a contractual replacement, under which
the derivative contracts must stipulate that the derivative partner must search for a new derivative
partner, if it is no longer able to satisfy certain rating requirements itself. This “replacement
derivative partner” must also have a rating from the agency. This approach is also likely
to be problematic, at the very least, in terms of competition law.
The interim conclusion is that it is time to reform the existing Regulation governing rating
agencies by setting new priorities. In addition to increasing transparency with respect to the
models used, the agencies need to concentrate much more on communicating with other market
participants. The agencies’ refusal to recognise external ratings by third parties also needs
to be addressed.
80
No Compulsory Additional Rating
However, the goal of avoiding conflicts of interest has been addressed as comprehensively as
possible in the Regulation, given the existing rating system. In our view, compulsory rating by
at least two agencies, which is currently under discussion, will not lead to any improvement.
We believe that this is the wrong approach, as it would increase even more the significance of
external ratings for regulatory purposes without providing sufficient benefits in return. Finally,
it would push up the costs and expenses of the institutions concerned. Such a requirement
would not increase competition either, since one of the three established agencies would probably
be commissioned to provide the second rating. Even if, as occasionally suggested, a foundation
were made responsible for awarding the rating contract, it would still be impossible to
avoid the established agencies. Because rating agencies rely on their good reputation and their
track record, a new agency would first have to develop both of these. It is inconceivable that a
foundation could compel issuers to award a rating contract to an unknown agency. The same
situation would arise if, as proposed alternatively, a rating foundation were set up to compile
its own ratings. Even a foundation of this kind would first have to develop a reputation for itself
before it would be able to provide ratings profitably or, at least, on a break-even basis. At the
same time, an attempt to develop a new agency should not be condemned to failure from the
outset.

Reduce the Significance of External Ratings forRegulatory Purposes –
Allow Central Banks to Publish Credit Ratings
In view of the complex problems involving rating agencies, the significance of external ratings
for regulatory purposes needs to be reduced. Taking small steps might be the best way
to accomplish this. For example, national central banks within the eurozone could expand
their credit analysis procedures for commercial loans to include Pfandbriefe and other covered
bonds. Such ratings would not have to be universal in nature. On the contrary, it would suffice
if they could be used to approve Pfandbriefe as ECB collateral.
If it should turn out, even over the medium term, to be impossible to find ways out of the
rating agencies’ current importance for regulatory purposes, the regulators’ current approach
of not interfering in the rating methods per se would have to be challenged. Ultimately, bank
regulators review and approve all of the banks’ internal rating methodologies today already,
too. Despite all the doubts and difficulties associated with regulatory interference in rating
methods, the goal should be to treat internal bank ratings and external ratings by agencies
equally. Nevertheless, government intervention in methodologies would only be the secondbest
solution.
81

vdp Member Institutions
82
82

84 Aareal Bank | Wiesbaden
86 BayernLB | Munich
88 Berlin-Hannoversche Hypothekenbank | Berlin
90 Bremer Landesbank | Bremen
92 COREALCREDIT BANK | Frankfurt am Main
94 DekaBank | Frankfurt am Main
96 Deutsche Apotheker- und Ärztebank | Düsseldorf
98 Deutsche Genossenschafts-Hypothekenbank | Hamburg
100 Deutsche Hypothekenbank | Hanover
102 Deutsche Kreditbank | Berlin
104 Deutsche Pfandbriefbank | Unterschleißheim
106 Deutsche Postbank | Bonn
108 Deutsche Schiffsbank | Bremen
110 Dexia Kommunalbank | Berlin
112 Düsseldorfer Hypothekenbank | Düsseldorf
114 DVB Bank | Frankfurt am Main
116 Eurohypo | Eschborn
118 Hamburger Sparkasse | Hamburg
120 HSH Nordbank | Hamburg
122 ING-DiBa | Frankfurt am Main
124 Kreissparkasse Köln | Cologne
126 Landesbank Baden-Württemberg | Stuttgart
128 Landesbank Berlin | Berlin
130 Landesbank Hessen-Thüringen (Helaba) | Frankfurt am Main
132 M. M. Warburg & CO Hypothekenbank | Hamburg
134 Münchener Hypothekenbank | Munich
136 Nord/LB Norddeutsche Landesbank Girozentrale | Hanover
138 SaarLB Landesbank Saar | Saarbrücken
140 SEB | Frankfurt am Main
142 Sparkasse KölnBonn | Cologne
144 UniCredit Bank HypoVereinsbank | Munich
146 Valovis Bank | Essen
148 Westdeutsche ImmobilienBank | Mainz
150 WestLB | Düsseldorf
152 WL BANK Westfälische Landschaft Bodenkreditbank | Münster
154 Wüstenrot Bank Pfandbriefbank | Ludwigsburg
156 Commerzbank | Frankfurt am Main
157 IKB Deutsche Industriebank | Düsseldorf
158 Santander Consumer Bank | Mönchengladbach
83

Aareal Bank Group, headquartered in Wiesbaden, Germany is one of the leading international property
specialists. With employees from over 30 nations, the Group has local offices on three continents – in Europe,
North America and Asia. The parent company of the Group is the MDAX-listed Aareal Bank AG combining all
subsidiaries within the two segments Structured Property Financing and Consulting/Services.
The Structured Property Financing segment provides property financing solutions for national and international
clients on three continents. The Bank’s strength lies in the combination of local market expertise and special
industry know-how. Besides local experts, it has at its disposal specialist teams for logistics, retail property and
hotel financing packages. This alliance enables the Bank to offer the best possible financing concepts, designed
to meet the specific requirements of its clients in Europe, North America and Asia.
Aareal Bank has established itself as an active and reliable issuer of Pfandbriefe and senior unsecured and subordinated
debt in the capital markets.
The Consulting/Services segment offers services for the housing and the commercial property industry as well as
for the energy and waste disposal market. These comprise specialised banking services, Electronic Banking, the
automated settlement of mass payment transactions and the optimisation of advanced processes. Benefiting from
more than 50 years of experience, Aareal Bank Group furthermore offers consultancy services, software solutions
and services to optimise the IT-supported business processes of property companies and their associates. The
Group’s service portfolio consistently focuses on matching the requirements of its clients.
Rating: Mortgage Public Short-term Long-term
Pfandbriefe Pfandbriefe liabilities liabilities
Fitch AAA AAA F1 A–
84
Selected key figures*
Total assets
2010
€ million
41,217
2009
€ million
39,569
Mortgage loan portfolio
22,884
21,838
of which cross-border
19,195
18,164
Mortgage loan commitments
6,673
3,843
of which cross-border
5,744
3,251
Public-sector loan portfolio
9,857
9,348
of which cross-border
5,032
4,796
Public-sector loan commitments
n. s.
n. s.
of which cross-border
n. s.
n. s.
Total funds outstanding (registered and bearer bonds)
23,048
23,126
Public Pfandbriefe
3,010
2,811
Mortgage Pfandbriefe
8,091
7,368
Unsecured bonds
4,687
5,367
Promissory notes
7,260
7,580
Jumbo issues outstanding
1,000
2,000
Refinancing funds raised
3,943
5,403
Public Pfandbriefe
265
33
Mortgage Pfandbriefee
2,155
2,301
Unsecured bonds
812
2,530
Promissory notes
711
539
Own funds as shown in the balance sheet – total –
3,177
3,297
Core capital (without net income)
1,909
2,028
Profit-sharing capital
480
482
Subordinated liabilities
560
559
Net interest income
509
460
Administrative expenditure
366
361
Operating result before provisions for risks
239
237
Provisions for risks
105
150
Operating result after provisions for risks
134
87
Income for the year
76
49
*Aareal Bank Group
Presence in electronic media: Reuters: ARLG.DE; Bloomberg: ARL
Contacts:
Head of Treasury: Dr. Tammo Diemer Tel.: +49 611 348-3001 tammo.diemer@aareal-bank.com
Asset-Liability-Management: Tanja Stephan Tel.: +49 611 348-3883 tanja.stephan@aareal-bank.com
Head of Money Markets: Michael Hamp Tel.: +49 611 348-3861 michael.hamp@aareal-bank.com
Head of Capital Markets: Tobias Engel Tel.: +49 611 348-3851 tobias.engel@aareal-bank.com
Capital Markets: Jan Siemon Tel.: +49 611 348-3852 jan.siemon@aareal-bank.com
Head of Investor Relations: Jürgen Junginger Tel.: +49 611 348-2636 juergen.junginger@aareal-bank.com

Aareal Bank AG
Paulinenstrasse 15
65189 Wiesbaden
Telephone: +49 611 348-0
Telefax: +49 611 348-2549
Internet: www.aareal-bank.com
Shareholders:
Aareal Holding Verwaltungsgesellschaft mbH, 28.9 %
– 6.9 % Bayerische Beamten Lebensversicherung a.G.
– 6.9 % Swiss Life AG
– 5.2 % Versorgungsanstalt des Bundes und der Länder
– 4.7 % Dr. August Oetker KG
– 2,7 % Deutscher Ring Lebensversicherungs-AG und
Deutscher Ring Sachversicherungs-AG
– 1.4 % Deutscher Ring Krankenversicherungsverein a.G.
– 1.1 % Condor Lebensversicherungs-AG
Free float (remainder)
Public-sector cover pool
Dec. 31, 2010
€ million in%
Dec. 31, 2009
€ million
3,179
Nominal volume 1)
3,375 100
risk adjusted net present value 3) 263
219
by ratings (Fitch)
AAA
AA
A
BBB
without rating (Fitch)
by borrowers
1,302
224
50
25
1,774
37
7
2
1
53
2,389
239
8
0
543
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
202
1,990
0
269
31
883
813
70
6
59
0
8
1
26
24
2
113
2,024
0
196
32
814
744
70
0 %
10 %
20 %
3,014
0
361
89
0
11
2,847
0
332
Further cover assets 2)
Over-collateralization
nominal
nominal
net present value
0
365
316
0
368
357
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
85
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 2)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28 par. 2 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
8,489
1,004
7,485
1,361
600
761
15
756
7,718
705
427
306
7,051
617
773
460
802
1,251
3,148
973
1,267
1,719
1,505
100
12
88
100
44
56
0
9
91
8
5
4
83
7
9
5
10
15
37
8,150
1,063
7,087
1,401
618
783
14
793
7,343
725
462
326
6,637
426
725
406
671
1,270
3,139
1,032
1,813
2,211
1,948

86
With total assets of EUR 316.4 bn., BayernLB is the leading Bavarian commercial bank both for large
and Mittelstand customers in Germany and Europe, and for retail customers. It is an integral part of the
Sparkassen-Finanzgruppe in Bavaria and a high performance regional bank focused on Europe with
international expertise. BayernLB prides itself on its successful and long-term relationships with large
German and international customers. Financing activities for the public sector and institutional investors
are focused on its core markets of Bavaria and Germany.
The real estate business is one of the strategic pillars of BayernLB’s business model. The real estate
business comprises long-term commercial real estate financing and services, and financing for selected
property developers and portfolios. For BayernLB, as a major issuer of Pfandbriefe, the real estate business
and the quality of the cover funds are of overriding strategic importance. The business is focussed
geographically on Germany and selected areas within Europe, with service also being provided to German
Mittelstand customers in the rest of Europe and beyond.
In Bavaria, BayernLB serves Mittelstand customers in close cooperation with the savings banks.
BayernLB’s services are supplemented by financing and service solutions provided by the subsidaries
Real I.S. AG (Real I.S.), Bayerische Landesbank Immobilien-Beteiligungsgesellschaft mbH & Co. KG
(BayernImmo) and LB Immobilienbewertungsgesellschaft mbH (LBImmoWert) which is the centre of competence
for real estate valuation and research. Out of BayernLB’s total assets amounting to EUR 316.4 bn.,
EUR 80 bn. is attributable to the real estate sector (private real estate financing approximately EUR 27 bn.,
commercial financing approximately EUR 50 bn. and real estate leasing EUR 3 bn.).
BayernLB is an established issuer of capital market products on both the German and international capital
markets and provides investors with a broad spectrum of products, ranging from private placements to
jumbo Pfandbriefe and benchmark issues. Its public sector Pfandbriefe and mortgage Pfandbriefe make
BayernLB one of the leading long-term issuers in Germany.
As at 31 December 2010, BayernLB’s bonds and other securitised liabilities on the market totalled almost
EUR 80 bn.. As at this date EUR 7.8 bn. of mortgage Pfandbriefe and EUR 31.7 bn. of public sector Pfandbriefe
from BayernLB were outstanding. In addition, Group subsidiary Deutsche Kreditbank AG (DKB) is
also an issuer of mortgage Pfandbriefe und public sector Pfandbriefe.
Rating: Mortgage Public Short-term Long-term
Pfandbriefe Pfandbriefe liabilities liabilities
Fitch AAA AAA F1+ A+
Moody‘s Aaa (watch negative) Aaa (watch negative) P-1 (watch negative) A1 (watch negative)
Selected key figures
Total assets (Group)
Public-sector loan portfolio (excluding public sector banks)
Securitised liabilities
Mortgage Pfandbriefe
Public Pfandbriefe
Jumbo issues outstanding
Own funds (German Banking Act)
Core Capital (German Banking Act)
Core Capital Ratio
Own funds ratio (at group level)
Net interest income
Administrative expenses
Risk Provisions for the credit business
Earnings before taxes
2010
€ million
316,354
27,816
79,468
7,760
31,733
10,500
19,200
13,900
11.2%
15.5%
1,942
1,462
-696
885
2009
€ million
338,818
23,209
92,968
7,596
38,024
13,150
21,400
14,800
10.9%
15.7%
2,561
-2,125
-3,277
-2,765

BayernLB
Brienner Strasse 18
80333 Munich
Telephone: +49 89 2171-01
Telefax: +49 89 2171-23578
Internet: www.bayernlb.de
Owner:
Free State of Bavaria (ca. 94 %)
Association of Bavarian Savings Banks (ca. 6 %)
(via BayernLB Holding AG)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
100
Nominal volume 1)
43,857
risk adjusted net present value 3) 12,825
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Other countries
of which: EU
non-EU
935
12,064
8,505
18,774
3,579
1,498
2,081
2.1
27.5
19.4
42.8
8.2
41.9
58.1
Further cover assets 2)
Over-collateralization
nominal
nominal
net present value
2,549
14,674
13,530
46,277
1,112
11,843
6,559
23,788
3,335
1,429
1,906
3,091
11,344
10,181
9,792
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool 2)
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
9,970
2,811
7,159
23,269
886
1,501
1,250
7,219
400
2,609
2,850
2,678
100
28.2
71.8
96.3
3.7
15.1
12.5
72.4
9,808
3,005
6,803
25,456
902
1,667
1,341
6,800
400
2,612
2,855
2,617
87
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
Mortgage register according to PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
Presence in electronic media: Bloomberg, Reuters, etc.
Contacts:
Josef Gruber Tel.: +49 89 2171-25438 josef.gruber@bayernlb.de
Leiter Group Treasury
Horst Bertram Tel.: +49 89 2171-23440 horst.bertram@bayernlb.de
Head of Investor Relations
Dr. Jörg Senger Tel.: +49 89 2171-26524 joerg.senger@bayernlb.de
Head of Capital Markets
Jürgen Pohl Tel.: +49 89 2171-23166 juergen.pohl@bayernlb.de
Head of Collateral Management
Miriam Scuka Tel.: +49 89 2171-23509 miriam.scuka@bayernlb.de
Head of Funding Execution
Thomas Jebsen Tel.: +49 89 2171-27295 thomas.jebsen@bayernlb.de
Georg Jewgrafow Tel.: +49 89 2171-22612 georg.jewgrafow@bayernlb.de
MD Real Estate Division

Berlin Hyp is one of Germany’s leading Pfandbrief Banks. It operates five offices in Germany and
another five at selected foreign sites (Amsterdam, London, Paris, Prague and Warsaw). Its core business
segment is commercial real estate finance in Germany with focus on investment properties. Berlin Hyp
and its parent Landesbank Berlin AG share a common real estate finance division comprising both
banks’ sales and credit departments. Thus, Berlin Hyp’s customers benefit from the combination out
of a specialised mortgage bank’s tailor-made financing solutions and the entire product portfolio of
a broad-based universal bank.
Rating: Mortgage Pfandbriefe Public Pfandbriefe Senior Unsecured Short-Term Individual
Fitch AA+ AAA AA- F1+ C/D
Moody‘s Aa1 Aaa - - -
Selected key figures*
2010
€ million
2009
€ million
Total assets
40,738
41,291
Mortgage loan portfolio
17,464
15,648
Residential loans
5,906
6,069
Commercial loans
11,558
9,579
of which cross-border
3,107
2,208
Mortgage loan commitments
3,457
2,392
Residential loans
793
483
88
Commercial loans
of which cross-border
2,664
1,041
1,909
1,253
Public-sector loan portfolio
7,671
9,138
of which cross-border
822
1,114
Public-sector loan commitments
210
805
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
25,952
28,494
Mortgage Pfandbriefe
11,229
10,217
Public Pfandbriefe
9,235
12,843
Unsecured bonds
5,488
5,434
Jumbo issues outstanding
9,875
13,750
Refinancing funds raised
4,047
3,091
Mortgage Pfandbriefe
2,930
2,017
Public Pfandbriefe
167
417
Unsecured bonds
832
600
Promissory notes
82
10
Subordinated liabilities
36
47
Own funds as shown in the balance sheet – total –
1,199
1,320
Core capital (without net income)
829
729
Profit-sharing capital
0
200
Subordinated liabilities
370
391
Net interest income
215
214
Administrative expenditure
74.3
76.6
Operating result before provisions for risks
159
141
Provisions for risks
71
63
Operating result after provisions for risks
88
79
Expenditure from profit transfer
86
0
Income for the year
2
59
*all values based on the individual account
Presence in electronic media: www.berlinhyp.de
Contact:
Treasury
Sven Schukat Tel.: +49 30 2599-9510 sven.schukat@berlinhyp.de
Thomas Meister Tel.: +49 30 2599-9513 thomas.meister@berlinhyp.de
Investor Relations
Bodo Winkler Tel.: +49 30 2599-9521 bodo.winkler@berlinhyp.de

Berlin-Hannoversche Hypothekenbank AG
Budapester Strasse 1
10787 Berlin
Telephone: +49 30 2599-90
Telefax: +49 30 2599-9131
Internet: www.berlinhyp.de
Shareholder:
Landesbank Berlin AG (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
9,157
100
14,464
by ratings 2)
AAA/Aaa/AAA
4,316
47.1
5,184
AA/Aa/AA
4,057
44.3
6,430
A/A/A
164
1.8
574
BBB/Baa/BBB
0
0.0
228
BB/Ba/BB
209
2.3
0
without rating
411
4.5
648
by borrowers
German Federal Government
102
1.1
102
Federal states (Länder)
5,302
57.9
7,072
Local authorities
27
0.3
63
Public-sector financial institutions
1,748
19.1
3,513
Others
922
10.1
2,236
Other countries
1,056
11.5
1,478
of which: EU
801
8.8
1,229
non-EU
255
2.8
249
by weighting
0 %
- - -
- - -
10 %
- - -
- - -
20 %
- - -
- - -
of which further cover assets 3)
Over-collateralization nominal
nominal
1,313
1,235
13.4
1,590
1,621
89
net present value
1,141
11.4
1,542
risk adjusted net present value 4)
993
9.4
1,397
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
10,653
100
10,177
by property types
residential
2,690
25.2
2,774
commercial
7,963
74.8
7,403
by number of cover loans
residential
6,319
80.6
7,079
commercial
1,525
19.4
1,296
by average loan size (actual balance) 2)
up to € 0.3 million
364
3.4
432
from more than € 0.3 million up to € 5.0 million
3,067
28.8
3,332
over € 5.0 million
7,222
67.8
6,413
by regional distribution
Germany West
4,217
39.6
4,172
Germany East
1,513
14.2
1,509
Berlin
3,190
29.9
3,449
Other countries
1,733
16.3
1,047
of which: UK
320
18.5
234
France
544
31.4
323
Spain
4
0.2
4
Benelux countries
335
19.3
188
Scandinavia
6
0.3
5
others
524
30.2
293
Further cover assets 3)
nominal
2,114
- - -
644
Over-collateralization
nominal
1,538
13.7
797
net present value
1,597
13.6
764
risk adjusted net present value 4)
1,201
9.7
578
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization

With a business volume of approx. 41 billion Euros in 2010 and more than 1,000 employees in Bremen and
Oldenburg, Bremer Landesbank is the largest regional bank between the river Ems and the river Elbe. At the
same time it assumes the role of a Landesbank, a central bank for the savings banks, as well as a regional
commercial bank.
Owners of Bremer Landesbank are NORD/LB Norddeutsche Landesbank, which holds a share of 92.5% of
the initial share capital and the Free Hanseatic City of Bremen, which holds a share of 7.5%.
Bremer Landesbank regards itself as a universal bank. It acts as a regional commercial bank with nationwide
specialised business, whilst at the same time retaining its function as a Landesbank and a central bank for the
savings banks.
The north western region of Germany is the recognised business area of the bank. From here the bank supports
its regional and national customers in Europe, providing them with first-class solutions to support them in
realizing their financial targets. For this purpose the bank actively utilizes the market leadership position of the
Sparkassen-Finanzverbund (s-financial group). The bank focuses its sales activities on four strategic business
segments: corporate customers, private customers, financial markets and special finance. In addition to the aforementioned
four business segments, the bank also assumes its special responsibility for the North West region by
means of its shareholdings. This is because the focus of the investment portfolio is constituted by the regional as
well as national specialist finance institutes, in particular of the Sparkassen-Finanzverbund (s-financial group).
Equally, by means of its shareholdings, Bremer Landesbank contributes toward ensuring the fulfilment of the
public mandate and supports the empowerment of the regional economic area. In addition to this, its established
and down-to-earth way of doing business, as well as its sound financial figures, makes Bremer Landesbank a reliable
partner and promoter of initiatives, projects and non-profit organizations in the North West of Germany.
90
Rating: Mortgage Public non-guaranteed non-guaranteed financial
Pfandbriefe Pfandbriefe short-term liabilities long-term liabilities strength
Moody‘s – – P-1 Aa2 C
Fitch – – F1 A C
Selected key figures
Total assets
Mortgage loan portfolio
Public-sector loan portfolio
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe incl. Ship Pfandbriefe 1)
Public Pfandbriefe 2)
Unsecured bonds
Jumbo issues outstanding
Refinancing funds raised
Ship Pfandbriefe
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expenditure
Operating result before risk provisions and valuation
Provisions for risks
Operating result after risk provisions and valuation
Income for the year
2010
€ million
34,801
1,531
5,130
1,073
3,337
6,604
0
164
267
455
586
287
1,713
0
500
347.2
-161.3
253.2
-130.1
123.1
48
2009
€ million
33,787
1,507
5,268
995
3,663
6,776
0
8
343
1,109
1,928
805
1,579
0
500
330.2
-152.7
251.3
-128.5
122.9
48
1)
not including Mortgage Pfandbriefe issued before 19 July 2005 at € 400 mn. at end-2010 and € 593 mn. at end-2009
2)
not including Public Pfandbriefe issued before 19 July 2005 at € 2,917 mn. at end-2010 and € 3,363 mn. at end-2009
Presence in electronic media: Reuters: BREMERLB01
Contacts:
Trading
Kay Fischer Tel.: +49 421 332-2929 kay.fischer@bremerlandesbank.de
Herfried Knief Tel.: +49 421 332-2464 herfried.knief@bremerlandesbank.de
Asset-Liability-Management
Uwe Kaupert Tel.: +49 421 332-3102 uwe.kaupert@bremerlandesbank.de
Investor Relations
Fred Walther Tel.: +49 421 332-2453 fred.walther@bremerlandesbank.de

Bremer Landesbank
Kreditanstalt Oldenburg - Girozentrale -
Domshof 26
28195 Bremen
Telephone: +49 421 332-0
Telefax: +49 421 332-2322
Internet: www.bremerlandesbank.de
Träger:
NORD/LB Norddeutsche
Landesbank - Girozentrale (92.5%)
Freie Hansestadt Bremen (7.5%)
Public-sector cover pool 1)
Dec. 31, 2010
€ million in %
Dec. 31.12.2009 31, 2009
in € million Mio. €
Nominal volume 2)
by borrowers
German Federal Government and Federal states (Länder)
Local authorities
Others
of which: Public-sector financial institutions
Other countries (EU)
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
3,755
387
1,820
1,548
1,050
0
445
864
870
859
1)
without old loans pursuant to § 50 PfandBG in the amount of EUR 3,272m per 31.12.2010 respectively EUR 3,799m per 31.12.2009
2)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
100
10
49
41
28
12
23
3,920
392
2,102
1,326
850
100
413
671
652
637
Mortgage cover pool 1)
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 2)
by property types residential
commercial
by average
up to € 0.5 million
loan size
from more than € 0.5 mill. up to € 5.0 mill.
(actual balance) 5) over € 5.0 million
by regional
Germany West
distribution
Germany East
Berlin
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
829
524
305
377
420
32
693
103
33
95
265
329
317
100
63
37
45
51
4
84
12
4
11
32
609
409
200
313
270
26
531
66
12
240
224
267
248
91
1)
without old loans pursuant to § 50 PfandBG in the amount of EUR 495m per 31.12.2010 respectively EUR 631m per 31.12.2009
2)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28 par. 2 no. 1 a) PfandBG – total amount per tranche
Ship cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by average loan size (actual balance) 4)
up to € 0.5 million
from more than € 0.5 million up to € 5.0 million
over € 5.0 million
Countries of registry Bahamas
Germany
Gibraltar
Greece
Liberia
Malta
Marshall Islands
Netherlands
Panama
Turkey
Cyprus
Further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3)
750
3
401
346
7
591
12
24
0
27
41
18
5
0
21
50
386
369
259
100
1
53
46
1
79
2
3
0
4
6
2

COREALCREDIT BANK AG is a German specialist bank for commercial property finance with Germany as
its core market. The bank develops customized finance solutions for professional real estate clients both in
Germany and abroad. Its broad range of products and consultancy combined with flexibility, expertise and
speed ensures tailor-made solutions. Apart from its headquarter in Frankfurt am Main, COREALCREDIT
BANK AG also has five further offices in key German real estate markets.
The bank will continue to issue Mortgage Pfandbriefe under its business model. Business with public sector
borrowers, however, will not be continued and the existing portfolio shall be phased out in line with the
natural maturities.
Rating: Mortgage Public Short-term Long-term Individual
Pfandbriefe Pfandbriefe liabilities liabilities Rating
Fitch AA– AAA F3 BBB– D
Selected key figures
2010
€ million
2009
€ million
Total assets
9,834
11,375
Mortgage loan portfolio
4,638
5,231
Residential loans
1,625
1,946
Commercial loans
3,013
3,285
of which cross-border
–
–
Mortgage loan commitments
1,072
960
92
Residential loans
Commercial loans
314
758
162
798
of which cross-border
–
–
Public-sector loan portfolio
3,403
3,947
of which cross-border
1,171
1,475
Total funds outstanding (registered and bearer bonds)
5,860
7,489
Mortgage Pfandbriefe
2,960
3,506
Public Pfandbriefe
1,480
2,276
Unsecured bonds
–
–
Bonds backed by SoFFin guarantee
400
500
Promissory notes
1,021
1,207
Refinancing funds raised
994
1,505
Mortgage Pfandbriefe
783
1,003
Public Pfandbriefe
–
–
Unsecured bonds
–
–
Bonds backed by SoFFin guarantee
–
500
Promissory notes
211
2
Own funds as shown in the balance sheet – total –
1,094
1,117
Equity capital (incl. balance sheet loss)
694
696
Profit-sharing capital (after replenishment)
20
18
Subordinated liabilities
380
403
Income from net interest, commission and participations
69
78
Administrative expenditure
50
59
Operating result before provisions for risks
20
27
Risk provisions (net)
-14
-24
Operating result after provisions for risks
1
-2
Income for the year
3
3
Presence in electronic media: Reuters: Corealcredit; Bloomberg: Coreal
Treasury:
Investor Relations:
Thomas Arendt
Axel Leupold
Tel.: +49 69 7179-418 Tel.: +49 69 7179-543
Fax: +49 69 7179-416 Fax: +49 69 27179-543
e-mail: Thomas.Arendt@corealcredit.de
e-mail: Axel.Leupold@corealcredit.de

COREALCREDIT BANK AG
Corealcredit Haus, Grüneburgweg 58–62
60322 Frankfurt am Main
Telephone: +49 69 7179-0
Telefax: +49 69 7179-100
Internet: www.corealcredit.de
www.corealcredit.com
Shareholder:
LSF5 German Investments, L.P. (100 %)
Public sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
BB/Ba/BB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
1,402
184
896
58
90
50
124
0
288
25
634
1
454
454
465
0
937
165
81
144
137
100
13
64
4
6
4
9
0
21
2
45

DekaBank Deutsche Girozentrale is the central asset manager for the German Sparkassen-Finanzgruppe
(Savings Banks Financial Group). With assets under management (AMK and AMI) of approximately
€ 155 billion, DekaBank group is ranked amongst Germany’s largest financial service providers. Private
and institutional investors can choose from a wide range of equity, bond and property as well as mixed
funds. Germany’s savings banks and Landesbanken are exclusive sales partners for our funds. The Deka-
Bank group is active in the business areas of capital market asset management, real estate asset management
as well as corporates & markets. In our business division Asset Management Capital Markets, we
focus on management of 621 public funds, 364 special funds, 136 advisory/management mandates as well
as fund-linked asset management (as at 31 December 2010). The range of services also includes activities
of the Master KAG (136 mandates), which institutional customers use to pool their assets under management
with one investment company. The Group’s property expertise is pooled in the Asset Management
Property (AMI) business division. It offers products based on property investments and property finance
for private and institutional investors. The business division is the largest provider of open-ended property
funds in Germany and one of the leading property asset managers in Europe. The Property Finance
sub-division complements the range of services with tailored financing solutions for professional property
investors across the globe. The lending, trading and sales activities of the Capital Markets and Treasury
business have been grouped togehter in the Corporates & Markets (C&M) business division. The three subdivisions
Credits, Treasury and Markets make C&M the service provider for the Asset Management business
divisions. In addition C&M acts as a partner for institutional investors. In its capacity as a Pfandbrief
issuer, DekaBank has a longstanding history as an important partner for institutional investors.
94
Rating: Mortgage Public Short-term Long-term Financial
Pfandbriefe Pfandbriefe liabilities liabilities strength
Moody’s – Aaa P-1 Aa2 C
Standard & Poor‘s – AAA A-1 A –
Selected key figures
Total assets
Mortgage loan portfolio
Mortgage loan commitments
Public-sector loan portfolio 1)
Public-sector loan commitments 1)
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income) 2)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expenditure
Provisions for risks
Earnings before tax
Economic result
2010
€ million
130,304
7,970
2,504
39,891
4,969
30
19,513
32,464
8,585
2,500
20
2,262
1,419
1,164
4,080
83
853
422
836
52
877
925
2009
€ million
133,283
7,243
1,988
45,136
2,875
10
22,000
31,166
8,620
4,000
0
2,945
4,229
1,529
3,471
83
1,078
473
806
-352
520
662
1)
public sector loans + securities of public sector issuers
2)
incl. fund for general banking risks (§ 340 g HGB)

DekaBank Deutsche Girozentrale
Mainzer Landstrasse 16
60325 Frankfurt
Telephone: +49 69 7147-0
Telefax: +49 69 7147-1376
Internet: www.dekabank.de
Owners:
DSGV ö.K. (50.00 %)
Deka Erwerbsgesellschaft mbH & Co. KG (50.00 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
BB/Ba2/BB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
20,044
18,564
1,014
361
55
50
0
229
2,632
667
14,235
556
1,725
964
761
1,153
1,684
1,935
1,714
100
92.62
5.06
1.80
0.27
0.25
0.00
1.14
13.13
3.33
71.02
2.77
8.61
4.81
3.80
24,869
24,007
649
49
164
0
0
280
2,473
880
17,774
1,264
2,197
1,393
805
1,091
2,868
3,112
2,791
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails, based on Moody’s / S&P Ratings
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
95
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
other
by number of cover loans
residential
commercial
other
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
140.45
0.00
140.45
0.00
0
8
0
0.00
1.25
139.20
72.05
0.00
25.20
43.20
49.00
159.13
167.55
158.41
100
0.00
100.00
0.00
0.00
100.00
0.00
0.00
0.89
99.11
51.30
0.00
17.94
30.76
130.1
0.0
121.4
8.7
0.0
8.0
1.0
0.0
0.0
121.4
96.2
0.0
25.2
0.0
8.7
120.1
126.1
120.0
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
Presence in electronic media: Reuters: DGZ01 / Bloomberg: DEKA / www.dekabank.de
Contacts:
Anni Hönicke, Head of Real Estate Finance Tel.: +49 69 7147-7502 anni.hoenicke@deka.de
Ralf Paulsen, Head of Funding/Liquidity Management Tel.: +49 69 7147-2872 ralf.paulsen@deka.de
Dirk Schröter, Head of Liquidity Management Tel.: +49 69 7147-2936 dirk.schroeter@deka.de
Stephan Zeger, Liquidity Management Tel.: +49 69 7147-7431 stephan.zeger@deka.de

As a bank for the academic medical professions, apoBank has been a reliable partner for pharmacists,
physicians, dentists and veterinaries as well as their organisations and associations for more than
100 years. Due to its long-standing special expertise, the Bank is a professional bank partner in financial
and economic matters also for other market participants in the health care sector, especially for care
centres and commercial companies with a focus on the health care sector.
apoBank is a cooperative. Accordingly, its self-conception is characterised by the idea of promotion
of its members and self-help. As the bank in the health care sector, apoBank actively accompanies its
customers in a massively changing market environment. With around 100,000 members, more than
345,000 customers and a balance sheet total of about 40 billion Euros, apoBank is today Germany’s
largest primary cooperative bank and, as such, is integrated in the security systems of the German
cooperative banking sector.
Since June 2008, apoBank is an issuer of mortgage Pfandbriefe. The basis for the mortgage Pfandbriefbusiness
is the high stock of high granular loans secured by mortgages to retail clients.
Rating: Mortgage Short-term Long-term
Pfandbriefe liabilities liabilities Outlook
Standard & Poor’s AAA A-1 A+ stable
Moody‘s P-1 A2 negative
Fitch (Rating for the Finanzverbund) F1+ A+ stable
96
Selected key figures*
Total assets
Loans to customers
including: secured by mortgages
New advances in the loan sector
Total funds outstanding (registered and bearer bonds) 1)
Mortgage Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised 1)
Mortgage Pfandbriefe
Unsecured bonds
Promissory notes
Liable equity capital
including: core capital
Net interest income
Net commission income
Administrative expenditure 2)
Operating result before provisions for risks
Risk costs and precautionary measures for the customer lending business 3)
Risk costs and precautionary measures for financial instruments and participations 3)
Net income/net loss
2010
€ million
38,819
26,277
6,344
4,049
13,834
1,726
7,216
4,893
0
2,381
25
2,291
65
2,680
1,700
679
127
452
341
70
202
53
2009
€ million
41,231
25,600
5,582
4,093
16,444
1,776
9,131
5,537
0
5,293
1,060
3,522
712
2,486
1,512
618
112
423
318
103
485
-283
1)
Excluding subordinated capital
2)
Including depreciation
3)
Includes general value adjustments and provisioning reserves pursuant to section 340f of the German Commercial Code (HGB)
* All data based on the individual financial statement

Deutsche Apotheker- und Ärztebank eG
Richard-Oskar-Mattern-Strasse 6
40547 Düsseldorf
Telephone: +49 211 5998-0
Telefax: +49 211 5938-77
Internet: www.apobank.de
Owners:
99,915 Members
risk adjusted net present value 4) 1,194.37
Mortgage cover pool
Dec. 31, 2010
€ million
Nominal volume 1)
2,842.46
by property types
residential
commercial
2,779.11
63.35
by number of cover loans
residential
commercial
45,637
483
by average loan size (actual balance) 2)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
2,661.48
180.98
0.00
by regional distribution
Germany West
Germany East
Berlin
Further cover assets 3)
Over-collateralization
nominal
nominal
net present value
2,141.67
477.22
160.22
162.00
1,278.56
1,255.03
Dec. 31, 2009
€ million
2,318.55
2,291.48
27.07
40,383
268
2,261.75
56.80
0.00
1,796.27
416.16
106.12
180.00
722.65
664.09
648.92
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
97
Contacts:
Cassie Kübitz-Whiteley Tel.: +49 211 5998-9809 cassie.kuebitz-whiteley@apobank.de
Stephan Wallacher Tel.: +49 211 5998-515 stephan.wallacher@apobank.de
Fax: +49 211 593131

With total assets of € 63.4 billion and a mortgage loan portfolio of € 21.4 billion, DG HYP, founded in
1921, ranks among Germany’s leading mortgage banks. As the biggest mortgage bank in the Cooperative
Financial Services Network, DG HYP has attractive financing solutions to offer business investors and
public authorities. Mortgage and Public Pfandbriefe make up the main basis of DG HYP’s funding operations,
and comprise issues outstanding in the aggregate amount of € 40.8 billion – € 11.1 billion of which
are Jumbos. For Mortgage and Public Pfandbriefe, cover assets are syndicated into separate cover pools
which are exclusively secured by first-ranking real estate mortgages or public sector loans. By means
of the Electronic Calculation Of Cover (EDR), the cover assets will be calculated based on the provisions
of the German Pfandbrief Act (PfandbG) as well as the requirements imposed by rating agencies. Institutional
investors value the AAA-rated Pfandbriefe issued by DG HYP as a sound investment.
Rating: Mortgage Public Short-term Long-term
Pfandbriefe Pfandbriefe Liabilities Liabilities
Fitch – – F1+ A+/stable
Standard & Poor‘s AAA AAA A-1 A/stable
Selected key figures
2010
€ million
2009
€ million
Total assets
63,443
68,075
Mortgage loan portfolio
21,437
21,235
98
Residential loans
Commercial loans
9,777
11,660
11,069
10,166
of which cross-border
3,928
3,224
Mortgage loan commitments
4,613
4,174
Residential loans
776
282
Commercial loans
3,837
3,892
of which cross-border
1,317
1,453
Public-sector loan portfolio
33,297
38,643
of which cross-border
12,878
14,887
Public-sector loan commitments
634
550
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
43,494
57,771
Mortgage Pfandbriefe
14,403
14,080
Public Pfandbriefe
26,431
37,419
Unsecured bonds
2,660
6,272
Jumbo issues outstanding
11,125
15,625
Refinancing funds raised
7,425
3,755
Mortgage Pfandbriefe
4,205
2,021
Public Pfandbriefe
50
0
Unsecured bonds
104
122
Promissory notes
3,066
1,612
Own funds as shown in the balance sheet – total –
2,144
2,092
Core capital (without net income)
1,407
1,426
Profit-sharing capital
56
56
Subordinated liabilities
681
610
Net interest income
204
165
Administrative expenditure
97
123
Operating result before provisions for risks
131
68
Provisions for risks
-223
-203
Operating result after provisions for risks
-92
-135
Income for the year
–
–
Presence in electronic media: Reuters: DGHYP
Treasury:
Patrick Ernst, Head of Treasury Tel.: +49 40 33 34 22 05 patrick.ernst@dghyp.de

Deutsche Genossenschafts-Hypothekenbank AG
Rosenstrasse 2
20095 Hamburg
Telephone: +49 40 3334-0
Telefax: +49 40 3334-1111
Internet: www.dghyp.de
Shareholder:
DZ BANK AG (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating (largely loans to local authorities)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
27,081
9,391
5,614
3,447
0
8,629
73
5,550
8,797
3,440
489
8,731
8,118
612
22,449
0
4,631
2,066
2,716
3,025
2,845
100
34.68
20.73
12.73
0.00
31.87
0.27
20.50
32.49
12.70
1.81
32.24
29.98
2.26
82.28
17.72
7.09
7.71
9.05
8.58
30,936
11,561
7,142
2,248
0
9,985
74
6,434
9,499
4,594
530
12,338
11,370
968
25,453
0
5,483
2,532
2,395
2,811
2,665
99
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
15,590
by property types
residential
commercial
8,431
7,159
by number of cover loans
residential
commercial
128,021
5,760
by average loan size (actual balance) 4)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
8,065
2,140
5,385
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
10,162
1,885
1,317
2,226
589
509
0
250
281
597
Further cover assets 2)
Over-collateralization
nominal
nominal
net present value
risk adjusted net present value 3)
1,564
2,750
3,611
3,155
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
100
63.8
36.2
95.69
4.31
51.73
13.73
34.54
65.18
12.09
8.45
14.28
3.78
3.27
0.00
1.60
1.80
3.83
2.49
30.61
35.41
31.74
15,431
9,839
5,592
148,348
6,597
9,580
2,086
3,765
9,604
3,093
1,168
1,566
444
413
0
103
73
532
385
4,310
4,986
4,469

Deutsche Hypothekenbank (Actien-Gesellschaft) was founded in 1872.
As a mortgage bank we focus on financing and consulting in all aspects of real estate. True to our business-policy
orientation we specialize in large-volume commercial financings for professional real estate
clients. Supplementing our activities in Germany we focus our operations on our European target countries
UK, France, the Benelux countries, Spain and the US. A further pillar of our activities is public-sector
lending and capital market business with domestic and international market participants. In this business
area, a particular focus is on finance for public authorities in western European States. We have an extensive
range to offer our investors – from small-volume, tailor-made issues to Jumbo Pfandbriefe.
Deutsche Hypo forms part of NORD/LB since January 2008. By combining the power of the two banks, a
stronger position on the market for clients and investors in the field of commercial real estate financing
will be attained.
Rating: Mortgage Pfandbriefe Public Pfandbriefe Long-term Liabilities
Moody‘s Aaa Aaa A1
Selected key figures*
2010
€ million
2009
€ million
Total assets
35,998
34,050
Mortgage loan portfolio
11,456
9,784
Residential loans
2,317
2,507
Commercial loans
9,139
7,227
of which cross-border
4,740
4,364
100
Mortgage loan commitments
Residential loans
1,784
125
1,401
201
Commercial loans
1,659
1,198
of which cross-border
653
498
Public-sector loan portfolio
22,299
22,085
of which cross-border
10,443
10,119
Public-sector loan commitments
2,429
2,766
of which cross-border
1,115
763
Total funds outstanding (registered and bearer bonds)
28,504
24,652
Mortgage Pfandbriefe
6,576
5,291
Public Pfandbriefe
15,576
16,135
Unsecured bonds
6,352
3,226
Jumbo issues outstanding
5,250
6,000
Refinancing funds raised
6,471
4,852
Mortgage Pfandbriefe
1,694
826
Public Pfandbriefe
1,693
2,308
Unsecured bonds
1,494
1,422
Promissory notes
1,590
297
Own funds as shown in the balance sheet – total –
1,395
1,005
Core capital (without net income)
914
654
Profit-sharing capital
98
98
Subordinated liabilities
383
253
Net interest income
173
118
Administrative expenditure
69
57
Provisions for risks
79
70
Operating result after provisions for risks
45
-29
Income for the year
32
-32
* The annual accounts as of 31 December 2010 (including figures for the business year 2009) have been prepared according to HGB.
Presence in electronic media: Reuters: DHHB01; Bloomberg HHY
Contacts:
Dirk Schönfeld, Head of Treasury Tel.: + 49 511 3045-204 Dirk.Schönfeld@Deutsche-Hypo.de
Jürgen Klebe, Deputy Head of Treasury Tel.: + 49 511 3045-202 Juergen.Klebe@Deutsche-Hypo.de
Christian Fischer Tel.: + 49 511 3045-200 Christian.Fischer@Deutsche-Hypo.de
Christian Gail Tel.: + 49 511 3045-234 Christian.Gail@Deutsche-Hypo.de
Cristina Guilherme Tel.: + 49 511 3045-207 Cristina.Guilherme@Deutsche-Hypo.de
Sascha Langeheine Tel.: + 49 511 3045-201 Sascha.Langeheine@Deutsche-Hypo.de
Rico Noack Tel.: + 49 511 3045-237 Rico.Noack@Deutsche-Hypo.de
Gudrun Pösger Tel.: + 49 511 3045-206 Gudrun.Poesger@Deutsche-Hypo.de
Maren Tegtmeier Tel.: + 49 511 3045-203 Maren.Tegtmeier@Deutsche-Hypo.de

Deutsche Hypothekenbank (Actien-Gesellschaft)
Georgsplatz 8
30159 Hanover
Telephone: +49 511 3045-0
Telefax: +49 511 3045-459
Internet: www.deutsche-hypo.de
Shareholder:
NORD/LB
Norddeutsche Landesbank Girozentrale (100%)
Public-sector cover pool
Dec. 31, 2009
€ million in %
Dec. 31, 2008
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
BB/Ba/BB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
16,886
4,585
8,440
3,674
107
80
0
279
4,805
1,033
2,660
1,029
7,080
5,606
1,474
10,698
714
5,474
655
1,310
1,702
1,541
100
27
50
22
0.6
0.4
0
2
28
6
16
6
42
79
21
63
4
33
4
8
10
9
16,648
4,334
9,846
2,263
188
17
0
458
5,121
856
3,242
271
6,700
5,241
1,459
10,759
1,177
4,712
0
671
1,332
975
101
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
7,315
1,807
5,508
8,925
894
645
1,429
5,241
3,141
626
516
3,032
688
347
246
766
0
985
731
1,470
1,576
1,383
100
25
75
91
9
9
20
71
43
9
7
41
23
11
8
25
0
33
6,107
1,698
4,409
9,475
812
668
1,195
4,244
2,772
640
463
2,232
605
242
191
448
0
746
0
1,255
1,342
1,201
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche

Deutsche Kreditbank AG (DKB) was founded in 1990 and has been a part of the BayernLB Group since
1995. Headquartered in Berlin, the company reported total assets of EUR 54.5 bn in fiscal 2010. The bank
focuses on target groups from selected sectors such as housing and agriculture. DKB offers these customers,
inter alia, tailor-made financing solutions in the PPP (Public Private Partnership) segment and renewable
energies. For many years now, DKB has also seen significant growth in retail customer business,
operating nationwide as an online bank in this field. Today, more than two million customers take advantage
of DKB’s accounts and financing products.
On the funding side, the bank has for many years been an active issuer in the capital markets. A milestone
was its inaugural Public Pfandbrief Jumbo issued in 2006 with a volume of EUR 1 bn. Since then, the bank
has issued Triple-A rated Public Pfandbriefe and steadily increased the volume outstanding to about EUR
3.7 bn as at December 31, 2010. Since July 2009, DKB has also issued Triple-A rated mortgage-backed
Pfandbriefe of which EUR 2.3 bn were outstanding as per year-end 2010.
Rating: Public Pfandbriefe Mortgage-backed Pfandbriefe
Moody‘s Aaa Aaa
Selected key figures*
2010
€ million
2009
€ million
Total assets
54,528
50,857
Mortgage loan portfolio
32,199
31,686
Residential loans
27,268
27,442
Mortgage loan commitments
3,179
1,978
102
Residential loans
Public-sector loan portfolio
2,265
9,668
1,600
7,357
of which cross-border
–
–
Public-sector loan commitments
3,842
1,621
of which cross-border
–
–
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
2,275
1,219
Public Pfandbriefe
3,705
3,905
Unsecured bonds
1,026
1,024
Jumbo issues outstanding
1,000
1,000
Refinancing funds raised
Mortgage Pfandbriefe
1,057
1,219
Public Pfandbriefe
506
370
Unsecured bonds
0
0
Promissory notes
0
0
Own funds as shown in the balance sheet – total –
Core capital (without net income)
1,855
1,785
Profit-sharing capital
18
18
Subordinated liabilities
513
391
Net interest income
512
520
Administrative expenditure
252
235
Operating result before provisions for risks
208
198
Provisions for risks
146
68
Operating result after provisions for risks
62
130
Income for the year before profit transfer
63
126
*all values based on the individual account to HGB
Presence in electronic media: www.dkb.de
Contacts:
Thomas Pönisch Tel.: +49 30 20155-893 thomas.poenisch@dkb.de
Andreas Kohn Tel.: +49 30 20155-278 andreas.kohn@dkb.de
Fax: +49 30 20155-767

Deutsche Kreditbank AG
Taubenstrasse 7-9
10117 Berlin
Telephone: +49 30 20155-0
Telefax: +49 30 20155-465
E-mail: zentrale@dkb.de
Internet: www.dkb.de
Owner:
BayernLB (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
of which further cover assets 3) nominal
Over-collateralization
nominal
net present value
risk adjusted net present value 4)
5,732
264
50
15
10
5,393
31
859
3,894
0
873
75
75
0
5,732
0
0
343
2,369
2,506
2,268
100
5
1

pbb Deutsche Pfandbriefbank is a leading European specialist lender for Real Estate and Public Investment
Finance. pbb Deutsche Pfandbriefbank is active in Germany and other European countries.
In real estate finance, the bank offers funding solutions for professional national and international real
estate clients. This includes real estate companies, institutional investors and real estate funds. In Germany,
the bank also targets medium-sized and regionally orientated clients.
As an established financing partner, the bank has many years of experience in Public Investment Finance.
Its focus is on local authorities below the topmost governmental level that only have limited direct access
to the capital market.
Ratings: Mortgage Public Sector Long-term Short-term Financial
(As of June 28, 2011) Pfandbrief Pfandbrief liabilities Outlook liabilities strength
Fitch AA+ AAA A- Stable F1 D
Moody‘s Aa1 Aaa A3 Stable P-1 E+*
Standard & Poor‘s AA+** AA+** BBB Stable A-2 –
*Outlook positive **Outlook stable
Selected key figures
2010
€ million
2009
€ million
Total assets
168,671
272,944
Mortgage loan portfolio
34,501
44,831
Mortgage loan commitments
3,003
3,269
Public-sector loan portfolio
24,873
31,802
104
Public-sector loan commitments
Total funds outstanding (registered and bearer bonds)
982
664
Mortgage Pfandbriefe
17,393
22,378
Public Pfandbriefe
40,439
54,575
Unsecured bonds
6,059
105,214
Promissory notes
15,783
15,397
Jumbo issues outstanding
19,750
26,386
Refinancing funds raised
153,308
319,461
Mortgage Pfandbriefe
3,313
3,605
Public Pfandbriefe
4,592
2,087
Unsecured bonds
140,342
311,256
Promissory notes
5,061
2,513
Own funds as shown in the balance sheet – total –
8,796
9,341
Core capital (without net income / loss)
5,982
6,283
Profit-sharing capital
17
32
Subordinated liabilities
2,797
3,026
Net interest income
582
681
Administrative expenditure
279
275
Operating result before provisions for risks
336
370
Provisions for risks
395
1,975
Operating result after provisions for risks
-86
-1,605
Net income/loss for the year
-118
-1,660
Presence in electronic media: Reuters: HRE01-10, Bloomberg: HYPI
Contacts:
Liquidity Management
Thomas Facchinetti Tel.: +49 6196 9990-2923 thomas.facchinetti@pfandbriefbank.com
Funding:
Götz Michl Tel.: +49 6196 9990-2931 goetz.michl@pfandbriefbank.com
Asset & Liability Management:
Björn-Jakob Treutler Tel.: +49 6196 9990-2930 bjoern-jakob.treutler@pfandbriefbank.com
Investor & Rating Agency Relations
Frank Ertz Tel.: +49 89 2880-28776 frank.ertz@pfandbriefbank.com
Michael Heuber Tel.: +49 89 2880-28778 michael.heuber@pfandbriefbank.com
Group Corporate Communications
Walter Allwicher Tel.: +49 89 2880-28787 walter.allwicher@pfandbriefbank.com
Oliver Gruss Tel.: +49 89 2880-28781 oliver.gruss@pfandbriefbank.com

Deutsche Pfandbriefbank AG
Freisinger Strasse 5
85716 Unterschleißheim
Telephone: +49 89 2880-0
Telefax: +49 89 2880-10319
e-Mail: info@pfandbriefbank.com
Internet: www.pfandbriefbank.com
Shareholder:
Hypo Real Estate Holding AG (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating (direct public sector lending)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
41,931
12,160
14,676
9,225
419
5,451
12,610
18,039
1,327
9,955
23,040
22,226
814
36,264
0
5,668
1,865
4,295
5,799
4,992
100
29
35
22
1
13
30
43
3
24
55
96
4
86
0
14
57,038
26,291
5,206
11,727
6,714
7,100
14,858
18,561
2,076
21,543
31,657
28,979
2,678
41,574
0
15,464
1,985
5,864
7,999
6,799
105
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31.12.2004 31, 2009
in € million Mio. €
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 4)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3)
20,834
5,083
15,751
6,369
2,408
483
4,254
16,097
8,027
1,871
1,616
9,320
2,288
1,380
394
723
1,541
2,995
1,847
5,327
5,893
5,452
100
24.40
75.60
72.56
27.44
2.32
20.42
77.26
38.53
8.98
7.76
44.73
24.55
14.80
4.23
7.76
16.53
32.13
22,238 4.056
6,093 3.247
16,145 809
34.736 8,237
2,773 201
620
5,154
16,464
9,223 2.172
2,387 240
1,659 189
8,970 19
2,124 0
1,458 0
355 0
826 19
1,481 0
2,726 0
2,548
2,774 353
3,403 688
3,187
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 19, par. 1 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
4)
pursuant to § 28, par. 2 no. 1 a) PfandBG – tranche per size range

Postbank – one of Germany’s largest retail banks (as of March 31, 2011).
With about 14 million customers, approximately 20,000 employees and total assets of € 211 billion as of
March 31, 2011, Deutsche Postbank Group is one of Germany’s major financial services providers and as a
single institution the largest retail bank. Its focus is on retail business with private customers, moreover it is
also active in the corporate banking sector. In its “Transaction Banking” division, it performs back office services
for other financial services providers. Deutsche Postbank AG went public in June 2004. In 2006 Postbank
took over the biggest 850 branches of Deutsche Post and acquired the majority of BHW Holding AG toghether
with BHW Bausparkasse AG. Therefore Deutsche Postbank Group became one of the leading home finance
companies in Germany.
In December 2007 Postbank received the Pfandbrief licence. Since the beginning of 2008 Postbank is an active
player as an issuer of Mortgage Pfandbriefe in the international markets. The collateral pool for the time being
exclusively consists of German residential mortgage loans. Since July 2009 Postbank additionally issues Public
Pfandbriefe.
During the course of a takeover bid in 2010, over 21% of Postbank shares were offered to Deutsche Bank.
As a result Deutsche Bank increased its shareholding to nearly 52%. Deutsche Post continues to hold 39.5%
of Postbank shares.
Rating: Moody‘s Investors Service Standard & Poor‘s Fitch Ratings
Long-term debt A1 A A +
Outlook negative stable stable
Short-term debt P-1 A-1 F1+
Financial Strength D+ bbb+ C
Mortgage Pfandbriefe Aaa AAA AAA
Public Pfandbriefe Aaa AAA AAA
106
Selected key figures*
2010
€ million
2009
€ million
Total assets **
214,684
226,609
Mortgage loan portfolio
52,544
53,199
Residential loans
37,178
37,476
Commercial loans
15,366
15,723
of which cross-border
4,513
4,629
Mortgage loan new commitments
4,804
5,881
Residential loans
3,251
2,741
Commercial loans
1,553
3,140
of which cross-border
355
682
Public-sector loan portfolio
3,584
2,743
of which cross-border
221
208
Public-sector loan commitments
955
195
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
27,527
26,542
Mortgage Pfandbriefe
5,903
5,069
Public Pfandbriefe
2,661
1,981
Unsecured bonds
16,783
17,218
Promissory notes
2,180
2,274
Jumbo issues outstanding
6,000
5,000
Refinancing funds raised
1,473
4,666
Mortgage Pfandbriefe
1,091
2,001
Public Pfandbriefe
224
1,728
Unsecured bonds
158
791
Promissory notes
0
146
Own funds as shown in the balance sheet – total –**
Core capital (without net income)
5,489
5,175
Profit-sharing capital
1,230
1,224
Subordinated liabilities
4,347
4,283
Net interest income**
2,731
2,405
Fee and commission income**
1,316
1,338
Administrative expenditure**
-2,934
-2,864
Operating result before provisions for risks**
1,113
879
Provisions for risks**
-561
-678
Operating result after provisions for risks**
552
201
Income for the year**
138
76
*
all values based on the individual account
**
Group

Deutsche Postbank AG
Friedrich-Ebert-Allee 114-126
53113 Bonn
Telephone: +49 228 920-0
Internet: www.postbank.de
Shareholders:
Deutsche Post AG (39.5 %)
Deutsche Bank AG (52 %)
Free Float ( (8.5 %)
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
6,845
6,845
0
77,549
77,549
0
6,737
108
0
5,319
1,189
337
0
975
2,105
2,444
2,211
100
100.0
0.0
100.0
100.0
0.0
98.4
1.6
0.0
77.7
17.4
4.9
0.0
36.8
39.2
37.3
5,554
5,554
0
59,651
59,651
0
5,468
86
0
4,380
902
272
0
1,095
1,609
1,748
1,565
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
107
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2) :
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
without rating
by borrowers:
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
by weighting: 0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
isk adjusted net present value 4)
2,713
1,713
650
0
350
0
500
0
1,213
0
1,000
1,000
2,413
300
0
0
765
879
824
100
63.1
24.0
0.0
12.9
0.0
18.4
0.0
44.7
0.0
36.9
36.9
88.9
11.1
0.0
0.0
39.3
43.1
42.1
2,380
1,480
700
200
0
400
0
1,180
0,00
800
800
2,080
300
0
0
652
780
742
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
4)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
Presence in electronic media: Reuters: POBA01ff/ Bloomberg: POBA/ www.postbank.de
Contacts:
Eusebio Garre, Head of Liquidity Management Tel.: +49 228 920-54000 eusebio.garre@postbank.de
Sabine Bosch Tel.: +49 228 920-54103 sabine.bosch@postbank.de
Georg Briele Tel.: +49 228 920-54104 georg.briele@postbank.de
Peter Bürger Tel.: +49 228 920-54105 peter.buerger@postbank.de
Fax: +49 228 920-54009/54109
Lars Stoy, Head of IR Tel.: +49 228 920-18800 lars.stoy@postbank.de
Aiga von Kesselstatt, Head of Fixed Income IR Tel.: +49 228 920-18010 aiga.vonkesselstatt@postbank.de
ir@postbank.de

Deutsche Schiffsbank unifies the highest level of expertise in maritime financing worldwide as well as
the traditional strengths of Deutsche Schiffsbank, Commerzbank und Dresdner Bank. The main focus
of Deutsche Schiffsbank, which was founded in 1918, are long-term mortgage loans in ship finance and
public-sector loans, which serve as cover for the Bank’s Ship Pfandbriefe and Public Pfandbriefe respectively.
Its extensive international operations, representative offices in London and Athens as well as the
availability through Commerzbank’s Singapore Branch make Deutsche Schiffsbank one of the world’s
leading banking partners for the maritime industry.
The mostly long-term ship loans are granted predominantly in US-Dollars and are generally secured by
first-ranking ship mortgages which are entered as collateral in the relevant ship register. Commerzbank
intends to merge Deutsche Schiffsbank into Commerzbank AG.
Rating: Long-term Short-term Financial
liabilities liabilities strength
Moody‘s A3 P-2 D
Selected key figures
2010
€ million
2009
€ million
108
Total assets
Ship mortgage loan portfolio
Ship mortgage loan advances 1)
Public-sector loan portfolio
Public-sector loan advances 1)
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised (sales of newly issued bonds)
Ship Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income/incl. general bank risk reserve)
Profit-sharing capital
Subordinated liabilities
Net interest and commission income
Administrative expenditure
Operating result before provisions for risks
Provisions for risks
Operating result after provisions for risks
Income for the year
15,742
11,577
1,650
1,111
0
11,676
4,527
1,439
667
5,043
0
1,773
1,245
0
83
178
1,427
995
170
262
191
28
170.9
165.3
5.6
0
16,311
11,287
1,989
1,246
50
10,982
4,674
1,472
843
3,993
0
4,457
1,033 2)
0
265
3,159
1,432
995
170
267
160
30
133
109.5
23.5
0
1)
pay-outs
2)
whereof € 1 billion own holdings
Contacts:
Head of Treasury: Jeremy D. Scott Tel.: +49 421 3609-204
Capital Markets: Thorsten Eggers Tel.: +49 421 3609-213
Reinhard Girke Tel.: +49 421 3609-253
Money Markets/ Foreign Exchange: Gabriele Vollmer Tel.: +49 421 3609-259
Money Markets/ Foreign Exchange
and Asset and Liabilities Management: Patrick Elvers Tel.: +49 421 3609-341
Corporate Sales: Bernd Holtmann Tel.: +49 421 3609-346
Andreas Wetzk Tel.: +49 421 3609-354
Fax: +49 421 3609-265
E-Mail: refinanz@schiffsbank.com

Deutsche Schiffsbank AG
Domshof 17, 28195 Bremen
Telephone: +49 421 3609-0, Telefax: +49 421 3609-326
Domstrasse 18, 20095 Hamburg
Telephone: +49 40 37699-0, Telefax: +49 40 37699-178
Internet: www.schiffsbank.com
Shareholders:
Commerzbank AG (92 %)
Bayerische Hypo- und Vereinsbank AG (8 %)
(As at June 2011)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
1,614.80
100
1,631.4
by ratings 2)
AAA/Aaa/AAA
1,367.3
84.7
220
AA/Aa/AA
65.0
4.0
246
A/A/A
125.0
7.7
778
BBB/Baa/BBB
30.0
1.9
387
BB+
27.5
1.7
without rating
0.0
0.0
0
by borrowers
German Federal Government
0
0
0,0
Federal states (Länder)
722.6
44.7
702.6
Local authorities
0
0.0
0.0
Public-sector financial institutions
574.7
35.6
603
Others
0
0.0
30
Other countries
317.5
19.7
295.4
of which: EU
307.5
19.0
285.4
non-EU
10
0.6
10.0
by weighting
0 %
1,030.1
63.8
988
10 %
0
0.0
0
20 %
584.7
36.2
643
Further cover assets 3)
Over-collateralization
nominal
nominal
0
200.5
0.0
185.3
109
net present value
188.7
176.1
risk adjusted net present value 4)
127.0
113.2
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG / excess cover
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Ship cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
5,409.8
Nominal volume 1)
risk adjusted net present value 1,053.0
by average loan size (actual balance) 4)
up to € 0.5 million
from more than € 0.5 million up to € 5.0 million
over € 5.0 million
11.0
1,069.9
4,646.7
Countries of registry Germany
Greece
Liberia
Hong Kong
Panama
Bahamas
Cyprus
Marshall Islands
Malta
Others
2,298.5
474.9
315.6
202.2
210.0
248.2
260.7
519.0
273.0
579.8
Further cover assets 2) nominal
215.0
Over-collateralization nominal
net present value
1,167.7
1,254.1
1)
without „further cover assets“
2)
pursuant to § 26 PfandBG
100.0
0.2
18.7
81.1
42.7
8.8
5.9
3.8
3.9
4.6
4.8
9.6
5.1
10.8
5,258.6
14.2
1,004.7
4,504.6
2,299.7
441.8
346.7
210.3
184.4
274.9
220.7
547.9
261.5
470.7
152.9
825.7
940.5
742.8

Dexia Kommunalbank Deutschland AG (“Dexia Deutschland”) is fully owned by Dexia Crédit Local, one of
the main entities of the Dexia-Group. Dexia Deutschland was established in 1991 in Berlin as a Pfandbrief
bank specialising in public-sector lending. The business focus is on lending to German municipalities and
to the public sector in other European countries, mainly in France and Belgium.
Origination of new business is based on two channels: self-originated business with German municipalities
and Dexia Group originated business mainly in its franchise markets Belgium and France. Dexia Deutschland’s
main funding instrument is the Public Pfandbrief. In recent years, Dexia Deutschland has been leading
the market for Public Pfandbriefe in terms of issuing volumes and a regular issuer of benchmark Pfandbriefe.
Dexia Deutschland’s special expertise includes:
— more than 20 years of experience and know-how in servicing German municipalities,
— Analysis, assessment and management of public-sector credits,
— Management of cover pool to ensure AAA-quality of Public Pfandbriefe,
— Preservation of low cost base and operational excellence.
Rating:
Standard & Poor‘s
Public Pfandbriefe
AAA
Selected key figures
2010
€ million
2009
€ million
110
Total assets
Mortgage loan portfolio
Mortgage loan commitments
Public-sector loan portfolio
Public-sector loan commitments
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expenditure
Operating result before provisions for risks
Provisions for risks
Operating result after provisions for risks
Income for the year
48,694.6
0.0
0.0
43,900.0
2,633.9
0.0
34,337.3
30.0
1,781.7
8,690.0
6,459.7
0.0
6,347.7
10.0
102.0
531.1
142.3
106.0
41.5
18.2
23.1
18.5
4.6
0.8
47,291.0
0.0
0.0
42,683.0
3,446.0
0.0
34,571.0
50.0
1,927.0
7,690.0
6,115.0
0.0
6,040.0
20.0
55.0
331.0
142.0
127.0
45.0
19.0
25.0
20.0
5.0
0.6
Presence in electronic media: Reuters: DEXIA01-04, Bloomberg: DEXH, Internet: www.dexia.de
Treasury:
Patrik Krämer (Head of Treasury) Tel.: +49 30 25598-303
Christoph Schulte-Kemper Tel.: +49 30 25598-304
Janina Groschupp Tel.: +49 30 25598-305
Anett Krause Tel.: +49 30 25598-306
Steffen Stachna Tel.: +49 30 25598-308
Telefax: +49 30 25598 340
E-Mail: boerse@dexia.de

Dexia Kommunalbank Deutschland AG
Charlottenstrasse 82
10969 Berlin
Telephone: +49 30 25598-0
Telefax: +49 30 25598-200
Internet: www.dexia.de
Shareholder:
Dexia Crédit Local (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
34,922.3
100
36,336
by ratings 2)
AAA/Aaa/AAA
10,431.3
29.87
7,030
AA/Aa/AA
20,598.9
58.98
22,963
A/A/A
1,970.5
5.64
4,450
BBB/Baa/BBB
1,623.8
4.65
1,698
without rating
297.8
0.85
101
by borrowers
German Federal Government
61.8
0.18
78
Federal states (Länder)
12,241.9
35.05
11,711
Local authorities
7,744.3
22.18
8,032
Public-sector financial institutions
3,769.9
10.80
4,572
Others
1,966.4
5.63
2,516
Other countries
9,138.1
26.17
9,426
of which: EU
8,031.7
87.89
8,344
non-EU
1,106.3
12.11
1,082
by weighting
0 %
n/a
0
10 %
n/a
0
20 %
n/a
0
Further cover assets 3)
nominal
2,873.1
Over-collateralization
nominal
net present value
3,458.1
5,542.3
9.90
1,765
3,265
111
risk adjusted net present value 4)
5,498.3
2,941
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization

Düsseldorfer Hypothekenbank refinances its lending business by means of public sector Pfandbriefe
(covered bonds), covered mortgage bonds and uncovered bonds and loans. When structuring these issues,
the focus is put on the specific needs of the investors. The AAA rating for the public sector Pfandbriefe
of the Bank has remained unchanged for a number of years. To protect this top rating, Düsseldorfer
Hypothekenbank pursues consistent risk management.
Rating: Public sector Pfandbriefe Long-term Issuer Default Rating Outlook
Fitch AAA BBB- stable
As at July 2, 2010
Selected key figures
2010
€ million
2009
€ million
Total assets
20,641.9
24.170.0
Mortgage loan portfolio
1,594.6
1,796.0
Residential loans
197.9
377.0
Commercial loans
1,396.7
1,419.0
of which cross-border
958.6
1,055.7
Mortgage loan commitments
0
5.0
Residential loans
0
0.0
Commercial loans
0
5.0
of which cross-border
0
0.0
Public-sector loan portfolio
16,232.0
17,744.0
112
of which cross-border
Public-sector loan commitments
11,149.0
0
11,489.0
2.0
of which cross-border
0
0.0
Total funds outstanding (registered and bearer bonds)
12,201.1
14,294.0
Mortgage Pfandbriefe
812.0
839.0
Public Pfandbriefe
7,863.1
9,691.0
Unsecured bonds
2,400.0
2,510.0
Promissory notes
1,126.0
1,254.0
Jumbo issues outstanding
1,920.0
3,089.0
Refinancing funds raised
4,661.0
4,535.0
Mortgage Pfandbriefe
110.0
120.0
Public Pfandbriefe
0.0
250.0
Unsecured bonds
2,425.0
2,500.0
Promissory notes
2,126.0
1,665.0
Own funds as shown in the balance sheet – total –
662.5
307.0
Core capital (without net income)
872.7
499.0
Profit-sharing capital
14
39
Subordinated liabilities
205
55
Net interest income
6
55
Administrative expenditure
24
24
Operating result before provisions for risks
-30
14
Provisions for risks
9
-12
Operating result after provisions for risks
-21
2
Income for the year
-20
2
Presence in electronic media: Reuters: DUESSHYP01, 02, 03, 04
Pfandbriefe and other investment products, public-sector loans, derivatives:
Andreas Wodara Tel.: +49 211 86720-200 andreas.wodara@duesshyp.de
Herbert Weimer Tel.: +49 211 86720-203 herbert.weimer@duesshyp.de
Michael Zeppenfeld Tel.: +49 211 86720-202 michael.zeppenfeld@duesshyp.de
Patrick Nix Tel.: +49 211 86720-201 patrick.nix@duesshyp.de

Düsseldorfer Hypothekenbank AG
Berliner Allee 41
40212 Düsseldorf
Telephone: +49 211 86720-0
Telefax: +49 211 86720-199
e-mail: duesshyp@duesshyp.de
Internet: www.duesshyp.de
Shareholders:
LSF5 German Investments II, L.P. Delaware, USA (94%)
LSF5 Riverside Ltd. & Co KG Frankfurt am Main (6%)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
8,207
2,714
2,301
2,295
265
632
0
2,135
30
1,823
172
4,047
3,657
390
6,445
707
1,055
775
1,119
944
848
100
33.07
28.04
27.96
3.23
7.70
0.00
26.01
0.37
22.21
2.10
49.31
90.36
9.64
78.53
8.61
12.85
9,540
2,923
2,721
2,181
937
778
0
2,271
35
2,432
313
4,489
4,163
326
7,171
1,077
1,292
926
775
744
703
113
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
USA
Benelux countries (Lux, B, NL)
Switzerland
others
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
837
123
714
29
68
1
115
721
407
37
32
361
40
33
213
49
26
0
128
153
164
87
100
14.70
85.30
29.00
68.00
0.12
13.74
86.14
48.63
4.42
3.82
43.13
11.08
9.14
59.00
13.57
7.20
0.00
928
130
798
31
70
1
133
794
471
37
36
384
38
41
225
49
31
0
85
174
201
122
1)
without ”further cover assets“ pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche

DVB Bank SE, headquartered in Frankfurt/Main, Germany, is the leading specialist in the international
transport finance business. The Bank offers integrated financing solutions and advisory services in respect
of Shipping Finance, Aviation Finance and Land Transport Finance. The Bank operates out of offices in
Frankfurt/Main, Hamburg, London, Cardiff, Rotterdam, Bergen/Oslo, Piraeus, Zurich, Singapore, Tokyo,
New York and Curaçao. DVB Bank SE is listed at the Frankfurt Stock Exchange (ISIN: DE0008045501).
In November 2010, DVB successfully broadened its investor base by issuing its debut “Schiffspfandbrief”
in the amount of €250 million. The “Schiffspfandbrief” is collateralised by a cover pool of approximately
US$1.0 billion in eligible shipping loans. The pool represents a cross-section of DVB’s very well diversified
Shipping Finance portfolio. Moody’s assigned an Aa3 rating to the “Schiffspfandbrief”.
Selected key figures
2010
€ million
2009
€ million
Total assets
19,316.8
17,268.6
Mortgage loan portfolio
0.0
0.0
Mortgage loan commitments
0.0
0.0
Public-sector loan portfolio
0.0
0.0
Public-sector loan commitments
0.0
0.0
Total funds outstanding (registered and bearer bonds)
15,900.0
13,900.0
“Schiffspfandbrief”
250.0
0.0
Public Pfandbriefe
0.0
0.0
114
Unsecured bonds
Jumbo issues outstanding
14,166.9
0.0
11,662.1
0.0
Refinancing funds raised
3,752.7
3,618.7
“Schiffspfandbrief”
250.0
0.0
Public Pfandbriefe
0.0
0.0
Unsecured bonds
2,619.4
1,779.3
Long-term deposits and promissory notes
883.3
1,839.4
Own funds as shown in the balance sheet – total –
1,660.9
1,636.6
Core capital (without net income)
1,115.4
1,030.6
Profit-sharing capital
0.0
0.0
Subordinated liabilities
545.5
606.0
Net interest income
193.0
194.3
Allowance for credit losses
-52.0
-72.2
General administrative expenses
-176.2
-156.5
Consolidated net income before tax
131.1
86.6
Consolidated net income
104.0
76.1
Presence in electronic media: www.dvbbank.com
Contact:
Elisabeth Winter Tel.: +49 69 9750-4329 elisabeth.winter@dvbbank.com
Fax: +49 69 9750-4850

DVB Bank SE
Platz der Republik 6
60325 Frankfurt/Main
Telephone: +49 69 9750-40
Telefax: +49 69 9750-4444
Internet: www.dvbbank.com
Shareholders:
DZ BANK AG
Deutsche Zentral-Genossenschaftsbank,
Frankfurt am Main, 95.45%
free float, 4.55%
Ship cover pool
Dec. 31, 2010
€ million in %
Nominal volume 1)
by average loan size (actual balance) 2)
up to € 0.5 million
from more than € 0.5 million up to € 5.0 million
over € 5.0 million
Countries of registry
Germany
England
Greece
Hong Kong
Italy
Croatia
Liberia
Malta
Marshall Islands
Norway
Cyprus
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value
250.0
0.2
22.1
755.7
72.3
30.4
20.0
14.5
11.8
10.9
199.2
80.0
235.8
84.5
18.6
10.0
538.0
606.5
471.3
100
0.0
2.8
97.2
9.3
3.9
2.6
1.9
1.5
1.4
25.6
10.3
30.3
10.8
2.4
1.3
68.3
70.5
64.4
1)
without „further cover assets“
2)
pursuant to section 28 (2) no 1a Pfandbrief Act – total value by size category
3)
pursuant to section 26 PfandBG
115

Eurohypo AG is one of the leading banks in real estate and public finance in the U.S. and Europe. As
per the end of 2010 Eurohypo AG had assets of € 229 billion. The assets were divided into real estate
loans of € 89 billion and lending to the public sector of € 111 billion. A core business-line of Eurohypo AG
is commercial real estate finance. Developers and investors are avid takers of Eurohypo services which
cover a wide spectrum of products from bridge loans to mortgages from interest rate derivatives to
fx derivatives used to hedge these loans. Regarding public finance, the bank belongs to Europe’s top
institutions. The strength of the bank is not only on the lending side – Eurohypo is the leader in covered
bonds with acess to markets around the globe.
Rating: Mortgage Public Short-term Long-term Financial
Pfandbriefe Pfandbriefe liabilities liabilities strength
Fitch AAA* AAA F1 A- –
Moody‘s Aaa Aaa P-1 A3 D-*
Standard & Poor‘s AAA AAA* A-2* A-* –
*Outlook negative As of March 17, 2011
Selected key figures
2010
€ million
2009
€ million
Total assets
229,010
256,061
Mortgage loan portfolio
88,689
95,868
Mortgage loan commitments
5,756
3,031
Public-sector loan portfolio (incl. Financial Institutions)
110,591
129,062
116
Public-sector loan commitments
Total funds outstanding (registered and bearer bonds)
40
197,225
119
223,099
Mortgage Pfandbriefe
39,402
45,741
Public Pfandbriefe 1)
63,276
79,493
Other refinancing
94,547
97,865
Jumbo issues outstanding
40,188
53,388
Refinancing funds raised
8,029
16,722
Mortgage Pfandbriefe
3,989
9,777
Public Pfandbriefe 2)
3,794
3,198
Unsecured bonds
246
3,747
Own funds as shown in the balance sheet – total –
7,749
8,231
Core capital (without net income)
3,515
3,952
Profit-sharing capital
680
716
Subordinated liabilities
2,654
2,663
Hybrid Capital
900
900
Net interest income
1,338
1,288
Administrative expenditure
405
434
Operating result before risk provisions
622
659
Risk provisions
1,407
1,174
Operating result after risk provisions
-785
-515
Income/Loss for the year
-857
-902
1)
including Lettres de Gage to amount of € 13.0 bn (previous year € 14.0 bn)
2)
including Lettres de Gage to amount of € 1.0 bn (previous year € 0.0 bn)
Presence in electronic media:
Contacts:
Reuters: EUROHYPO01ff, Bloomberg: EHWP
Reuters: EHYG.DE, Bloomberg: EURHYP, EHY GR
Capital Market Funding: Franz-Josef Kaufmann Tel.: +49 69 136-81109 franz-josef.kaufmann@commerzbank.com
Public Finance ALM/Funding: Gerald Rosenberger Tel.: +49 69 27138-1326 gerald.rosenberger@eurohypo.com
Treasury: Manfred Bier Tel.: +49 69 27138-1105 manfred.bier@eurohypo.com
Capital Market Communication: Libor Vincent Tel.: +49 69 2548-26519 libor.vincent@eurohypo.com

Eurohypo Aktiengesellschaft
Helfmann-Park 5
65760 Eschborn
Telephone: +49 69 2548-0
Telefax: +49 69 2548-88888
Internet: www.eurohypo.com
Shareholder:
Commerzbank-Group (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by rating
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
non-rated (mainly loans to smaller local authorities)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
Further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3)
48,275
20,570
15,083
8,696
3,249
678
2,301
16,268
2,306
13,427
625
13,349
9,248
4,100
2,950
3,336
5,845
4,987
100
43
31
18
7
1
5
34
5
28
1
28
19
8
6
7
12
10
63,194
21,334
30,879
8,324
2,122
534
2,674
23,578
2,583
17,194
693
16,473
11,378
5,094
3,631
4,378
6,778
5,555
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG
117
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
50,040
20,406
29,634
235.298
224,984
10,314
14,453
7,357
28,230
24,818
5,879
3,932
15,412
3,368
2,161
2,436
1,129
228
6,090
880
12,499
13,241
12,040
100
41
59
96
4
29
15
56
50
12
8
31
7
4
5
2

Hamburger Sparkasse AG, also known as Haspa, is the leading retail bank for private, individual and
corporate SME clients from the Hamburg metropolitan area. Its balance sheet total of approximately
€ 38.2 billion make it Germany’s largest savings bank. It offers a wide range of financial services to
private and corporate clients in the greater Hamburg economic area which comprises of more than
3 million inhabitants.
In order to provide for an adequate refinancing of our mortgage business, Haspa permanently issues
mortgage covered bonds on the capital market since April 2006. We mainly issue plain vanilla and
structured registered mortgage covered bonds to our well known institutional clients.
Rating:
Moody‘s
Mortgage Pfandbriefe
Aaa
Selected key figures
2010
€ million
2009
€ million
118
Total assets
Mortgage loan portfolio 1)
Public-sector loan portfolio 2)
Total funds outstanding 3) (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expenditure
Operating result before provisions for risks
Provisions for risks
Operating result after provisions for risks
Income for the year
38,233
10,375
205
9,736
2,617
0
2,919
4,200
–
1,454
930
0
463
61
1,967
1,597
0
370
770
661
308
139
168
79
37,514
9,625
340
9,529
1,681
0
3,032
4,828
–
2,792
539
0
2,237
16
1,967
1,597
0
370
711
655
296
185
108
60
1)
balance sheet position ”secured by mortgages“
2)
balance sheet position ”public-sector loans“ = loans to domestic and cross-border public-sector entities
3)
savings banks certificates not included

Hamburger Sparkasse AG
Adolphsplatz / Großer Burstah
20457 Hamburg
Telephone: +49 40 3579-0
Telefax: +49 40 3579-3418
Internet: www.haspa.de
Shareholder:
HASPA Finanzholding (100 %)
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
,
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2,981
2,397
584
13,360
2,807
1,625
1,151
205
2,879
46
56
625
1,244
1,329
1,284
100
80
20
83
17
55
39
6
97
1
2
2,157
1,651
506
9,647
1,996
1,200
829
128
2,104
33
20
50
1,064
1,134
1,095
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28 par. 2 no. 1 a) PfandBG – total amount per tranche
119
Presence in electronic media: Reuters: HASPA02
Contacts:
Holger Nielsen Tel.: +49 40 3579-3340 Holger.Nielsen@Haspa.de
Volker Retzlaff Tel.: +49 40 3579-9258 Volker.Retzlaff@Haspa.de
Hagen-Christian Kümmel Tel.: +49 40 3579-3660 Christian.Kuemmel@Haspa.de
Mathias Loll Tel.: +49 40 3579-3183 Mathias.Loll@Haspa.de

HSH Nordbank is a dependable partner to the business community in northern Germany. Regionally the
Bank is focused on the corporate client, private banking as well as savings bank segments and does real
estate with main focus Germany. It operates globally in the regionally key industries of shipping, transportation
and energy. Its Capital Markets segment develops solutions and products for all clients.
In May 2006, HSH Nordbank received a license from the Federal Financial Supervisory Authority (BaFin)
to issue all former three types of Pfandbriefe pursuant to the new Pfandbrief Act (PfandBG) that came
into force on July 19, 2005. HSH Nordbank is thus one of the few Pfandbriefbanks which manage three
collateral pools i. e. it issues public Pfandbriefe, mortgage Pfandbriefe and ship Pfandbriefe.
Rating: Mortgage Public Ship- Guaranteed Guaranteed Counterparty
Pfandbriefe Pfandbriefe pfandbriefe short-term liabilities long-term liabilities credit
Moody‘s Aaa Aaa A2 P-1 Aa1 A3
Selected key figures
2010
€ million
2009
€ million
Total assets
163,016
184,971
Mortgage loan portfolio
24,200
30,963
Residential loans
7,500
9,867
Commercial loans
16,700
21,096
of which cross-border
14,800
18,533
Mortgage loan commitments
474
485
Residential loans
186
190
120
Commercial loans
of which cross-border
298
51
295
95
Public-sector loan portfolio
10,720
15,800
of which cross-border
762
389
Public-sector loan commitments
0
95
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
6,240
6,131
Public Pfandbriefe
10,722
12,698
Ship Pfandbriefe
2,560
2,580
Jumbo issues outstanding
0
2,000
Refinancing funds raised
Mortgage Pfandbriefe
568
2,697
Public Pfandbriefe
500
230
Ship Pfandbriefe
120
1,198
Unsecured bonds
43,463
58,353
Own funds as shown in the balance sheet – total –
11,269
12,227
Core capital (without net income)
5,992
6,572
Profit-sharing capital
132
439
Subordinated liabilities
5,145
5,216
Net interest income
1,712
1,624
Administrative expenditure
-801
-796
Operating result before provisions for risks
420
571
Provisions for risks
-929
-2,189
Operating result after provisions for risks
-509
-1,618
Income for the year
-219
-816
Presence in electronic media: Reuters, Bloomberg
Contacts:
Timm Höynck, UB GroupTreasury Tel.: +49 40 3333-11293 timm.höynck@hsh-nordbank.com
Christian Pechel, UB GroupTreasury Tel.: +49 40 3333-25631 christian.pechel@hsh-nordbank.com
Lars Tillmeier, UB GroupTreasury Tel.: +49 40 3333-25633 lars.tillmeier@hsh-nordbank.com
Günter Femers, Investor Relations / Rating Tel:. +49 40 3333-14601 günter.femers@hsh-nordbank.com

HSH Nordbank AG
Gerhart-Hauptmann-Platz 50
20095 Hamburg
Telephone: +49 40 3333-0
Telefax: +49 40 3333-34001
Internet: www.hsh-nordbank.de
Shareholders:
Hansestadt Hamburg (12.4%)
Land Schleswig-Holstein (11.0%)
HSH Finanzfonds AöR (59.9%)
Sparkassenverband Schleswig-Holstein (6.1%)
Nine trusts represented by J.C. Flowers & Co.LLC (10.7%)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
8,742.2
Nominal volume
risk adjusted net present value 2) 962.6
by ratings
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
6,605.24
1,358.25
563.39
110.05
105.27
by regional distribution Germany
Other countries
6,654.9
2,087.3
by weighting Solva 0
Solva 10
Solva 20
6,018.2
259
2,465
Further cover assets 1) nominal
356.6
Over-collateralization nominal
net present value
1,336.1
1,157.6
1)
pursuant to § 20, par. 2 PfandBG
2)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
100
76
16
6
1
1
76
24
69
3
28
5
18
14
13
10,505
7,950
1,564
723
267
0
8,150
2,355
6,750
1,304
2,451
146
1,726
1,586
1,329
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by average loan size (actual balance) 5) up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany
Other countries
of which: France
Austria
Benelux countries
Scandinavia
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
5,533.8
1,472.2
4,061.6
32.6
1368
4,133.2
3,302.6
2,231.2
780.6
11.8
781.2
328.6
572.8
1,163.9
1,327.5
1,228.4
100
27
73
1
25
75
60
40
35
1
35
15
12
24
26
24
4,571
1,263
3,308
43
1,092
3,436
1,710
654
12
752
246
46
175
512
660
584
121
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28 par. 2 no. 1 a) PfandBG – total amount per tranche
Ship cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
Countries of registry
Further cover assets 2)
Over-collateralization
2,885.5
Germany
2,100.6
Panama
152.9
Liberia
231.9
Cyprus
146.8
Marshall-Islands
30.3
Norway
50
Malta
90
Hong Kong
25.2
Netherlands
0
Italy
0
Others
57.8
nominal
413
nominal
738.5
net present value
857.8
risk adjusted net present value 3) 381.6
100
73
5
8
5
1
2
3
1
0
0
2
16
29
34
15
4,398
2,524
175
154
136
124
40
34
34
30
7
9
1,131
1,818
1,740
1,083
1)
without „further cover assets“ pursuant to § 21 PfandBG 2) pursuant to § 26 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization

ING-DiBa with its more than 7 million private customers is the largest direct bank in Germany. It offers
its customers a wide range of products and services. The core business is savings, mortgages, brokerage,
consumer loans and current accounts for private individuals. The business model focuses on few and
transparent products with low costs and a high cost efficiency. ING-DiBa is available for its customers
7 days a week, 24 hours a day. The German business magazine “Euro” awarded ING-DiBa the title
Germany’s “Beliebteste Bank 2011” (most popular bank). ING-DiBa was granted the licence to issue
mortgage Pfandbriefe from the German financial services authority BaFin in 2010.
On 31st May 2011 a programme for the issuance of mortgage Pfandbriefe has been launched, out of
which ING-DiBa will issue its Pfandbriefe. Starting the Pfandbrief business is the next milestone in the
development of ING-DiBa and reflects its position as a large mortgage financer in Germany. The cover
pool for the time being consists of German residential mortgage loans exclusively. Mortgage Pfandbriefe
are a further diversification of ING-DiBa‘s funding mix. The issuer is incorporated as a stock corporation
(Aktiengesellschaft) under the laws of the Federal Republic of Germany.
Rating: Mortgage Short-term Long-term Financial
Pfandbriefe liabilities liabilities strength
Moody‘s Aaa P-1 Aa3 C+
Selected key figures
2010
€ million
2009
€ million
Balance-sheet total
96,333
87,753
Equity as shown in balance sheet
4,831
4,499
122
Core capital ratio (%)
Net interest income
21.10
1,128
21.68
815
Addition to loan loss provisions
127
98
Net fee and commission income
43
46
Total expenses
670
600
Profit before tax
494
280
Profit after tax
345
202
Contacts:
Wolf Müller Head of Treasury Tel.: +49 69 27222-69151 Wolf.Mueller@ing-diba.de
Dieter Schreiner Liquidity Management / Funding Tel.: +49 69 27222-69159 D.Schreiner@ing-diba.de
Alexandra Bayer Investor & Rating Agency Relations Tel.: +49 69 27222-69304 A.Bayer@ing-diba.de
Ulrich Ott Head of Corporate Communications Tel.: +49 69 27222-66233 U.Ott@ing-diba.de

ING-DiBa AG
Theodor-Heuss-Allee 106
60486 Frankfurt am Main
Telephone: +49 69 50 50 90 69
Telefax: +49 69 27222-66444
Internet: www.ing-diba.de
Owner:
ING Deutschland GmbH, Frankfurt am Main
Mortgage cover pool
June 30, 2011
€ million in %
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 2)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranch
802
802
0
10,920
0
801
1
0
656
102
44
35
337
382
343
100
100
0
100
0
100
0
0
82
13
5
67
76
72
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
123

Kreissparkasse Köln – with a business volume of € 24.9 billion and a balance sheet total of € 24.5 billion –
is Germany’s third largest savings bank. Due to its strategic location with a wide catchment area, Kreissparkasse
Köln covers an aggregate territory of 3,650 square kilometres with 42 cities and municipalities
in its four counties Rhein-Erft-Kreis, Rheinisch-Bergischer Kreis, Oberbergischer Kreis and Rhein-Sieg-
Kreis. As a regional market-leader, Kreissparkasse Köln supplies the people, trade and industry as well as
the counties, the cities and municipalities with the whole scope of financial products and services in its
aggregate territory. Kreissparkasse Köln’s broad customer base consists of retail clients, private wealth
management, small and medium-sized businesses as well as the public sector. Financing of real estate
and local authority loans rank among the core business segments of the Kreissparkasse Köln.
Kreissparkasse Köln began issuing Pfandbriefe at November 2003. Since October 18, 2005, Kreissparkasse
Köln is a holder of a Pfandbrief licence under the new Pfandbrief Act.
Rating: Mortgage Short-term Long-term Financial
Pfandbriefe liabilities liabilities strength
Moody‘s Aaa P–1 Aa2 C
Selected key figures
2010
€ million
2009
€ million
Total assets
24,483
24,042
Mortgage loan portfolio
6,939
6,530
Residential loans
5,776
5,526
Commercial loans
1,163
1,004
124
of which cross-border
Mortgage loan commitments
0
1,138
0
1,015
Residential loans
864
735
Commercial loans
274
280
of which cross-border
0
0
Public-sector loan portfolio
2,477
2,367
of which cross-border
0
0
Public-sector loan commitments
347
339
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
2,734
2,448
Mortgage Pfandbriefe
1,382
847
Public Pfandbriefe
239
168
Unsecured bonds
651
948
Promissory notes
462
485
Jumbo issues outstanding
0
0
Refinancing funds raised
741
829
Mortgage Pfandbriefe
544
587
Public Pfandbriefe
81
40
Unsecured bonds
92
146
Promissory notes
24
56
Own funds as shown in the balance sheet – total –
1,650
1,734
Core capital (without net income)
1,285
1,263
Profit-sharing capital
53
55
Subordinated liabilities
312
416
Net interest income
467
420
Administrative expenditure
385
383
Operating result before provisions for risks
236
192
Provisions for risks
174
158
Operating result after provisions for risks
62
34
Income for the year
33
16
Presence in electronic media: Reuters: KSKKOELN03
Treasury:
Thorsten Hildebrand Tel.: +49 221 227-2081 thorsten.hildebrand@ksk-koeln.de
Matthias Bourgart Tel.: +49 221 227-2913 matthias.bourgart@ksk-koeln.de

Kreissparkasse Köln
Neumarkt 18 – 24
50667 Cologne
Telephone: +49 221 227-01
Telefax +49 221 227-3920
Internet: www.ksk-koeln.de
Owner:
Zweckverband für die Kreissparkasse Köln
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
483
0
20
0
0
463
0
2
342
18
121
0
483
0
244
272
241
100
0.0
4.1
0.0
0.0
95.9
0.0
0.4
70.8
3.7
25.1
0.0
100.0
0.0
102.4
106.5
114.4
311
0
20
0
0
291
0
2
272
20
17
0
311
0
0
0
144
150
131
125
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1,268
1,076
192
11,119
730
921
336
11
1,252
7
9
0
339
225
340
285
100
84.9
15.1
93.8
6.2
72.6
26.5
0.9
98.7
0.6
0.7
0.0
100.0
16.3
24.1
22.2
1,067
894
173
9,099
585
776
285
5
1,053
7
7
0
274
406
488
427
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche

Landesbank Baden-Württemberg is a universal bank and international commercial bank with total assets
of approximately € 375 billion (31.12.2010). In about 210 branches and representative offices and at
selected overseas locations – including New York, London, Singapore and Seoul – at the end of 2010,
13 061 employees were working for the success of the LBBW Group. The international network is complemented
by the five German centers in Beijing, Mexico City, Singapore, Moscow and Delhi-Gurgaon. As
parent company of the Group, LBBW is responsible for managing the entire LBBW Group. So LBBW
fulfills control functions within the Group, bundling within its activities that support retail banking and
activities that do not require regional relations with customers. LBBW is also directly responsible for serving
corporate customers, along with institutional clients and public sector institutions. LBBW additionally
concentrates on exercising its functions as the central bank to the savings banks. The range of products
for corporate customers is tailored to small and medium-sized companies and includes – alongside other
conventional financial services – payment settlement and asset management services. Together with its
legally dependent institutions (Baden-Württembergische Bank, Sachsen Bank and Rheinland-Pfalz Bank)
as well as its specialized subsidiaries, LBBW is active in a variety of business segments of a modern bank.
Rating:* Non-guaranteed Non-guaranteed
Mortgage Public short-term long-term Financial
Pfandbriefe Pfandbriefe liabilities liabilities strength
Moody‘s Aaa Aaa P–1 Aa2** C–**
Fitch – AAA F1+ A+ C/D
* as of: 2011-05-18 ** Outlook negative
126
Selected financial figures
2010
2009 5)
€ million € million
Net profit 1) -347
-1,482
Total assets 1)
Mortgage loan portfolio 2)
Residential loans
Commercial loans
of which: abroad
New mortgage lendings 2)
Residential loans
Commercial loans
of which: abroad
Public-sector loan portfolio
of which: abroad
New lendings to the public sector
of which: abroad
Total funds outstanding (registered and bearer securities)
Mortgage Pfandbriefe
Public Pfandbriefe
of which: Jumbo issues outstanding 4)
Unsecured bonds 3)
Refinancing funds raised
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds 3)
Promissory notes
Equity 1)
Net interest income 1)
Administrative expenditure 1)
Risk provisioning for bad and non-performing loans 1)
374,413
37,325
20,374
16,951
10,224
5,081
3,172
1,909
629
24,493
2,368
–
–
113,580
5,590
49,279
16,000
58,711
60,454
1,371
2,827
56,256
–
9,960
2,163
1,764
471
411,694
40,492
22,013
18,479
11,794
5,972
3,234
2,738
1,501
26,081
3,963
–
–
140,900
6,518
59,200
19,450
75,182
91,760
2,170
5,604
83,986
–
10,525
2,778
1,909
1,527
1)
Group figures
2)
Mortgage business with commercial and private clients
3)
Including money-market paper
4)
Volume included in the position “Public Pfandbriefe”
5)
Previous year’s figures adjusted to the new balance sheet classification referred to form 1 »RechKredV«
of the regulations from BilMoG and group figures according to IAS 8 respektively

Landesbank Baden-Württemberg
Am Hauptbahnhof 2
70173 Stuttgart
Telephone: +49 711 127-0
Telefax: +49 711 127-43544
e-mail: kontakt@LBBW.de
Internet: www.LBBW.de
Owners:
State of Baden-Württemberg (19.570 %)
Sparkassenverband Baden-Württemberg (40.534 %)
City of Stuttgart (18.932 %)
Landeskreditbank Baden-Württemberg – Förderbank (2.706 %)
Landesbeteiligungen BW (18.258 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
Further cover assets 2) nominal
Over-collateralization nominal
net present value
61,546
1,732
9,973
6,340
35,854
5,279
2,368
960
1,408
21,448
40,098
1,504
13,774
13,762
13,070
100
2.8
16.2
10.3
58.3
8.6
3.8
34.8
65.2
70,923
1,484
9,781
6,428
43,688
5,729
3,813
2,252
1,561
23,634
47,289
1,783
13,506
13,444
12,622
Mortgage cover pool 1)
risk adjusted net present value 3) Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
127
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG as well as the safety margin to § 4 Abs. 1 PfandBG
2)
pursuant to § 20, par. 2 PfandBG as well as § 4 Abs. 1 PfandBG
3)
the lowest risk-adjusted value of over-collateralization
Nominal volume 2)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
9,014
5,132
3,882
44,621
2,731
3,482
2,625
2,907
6,719
1,412
552
331
435
5,054
5,511
5,009
100
56.9
43.1
74.5
15.7
6.1
3.7
7,928
4,804
3,124
40,735
1,974
3,178
2,275
2,475
6,011
1,353
304
261
267
4,033
4,420
3,927
1)
Mortgage cover pool according to PfandBG
2)
without “further cover assets” pursuant to § 19, par. 1 PfandBG as well as the safety margin to § 4 Abs. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG as well as § 4 Abs. 1 PfandBG
4)
the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28 par. 2 PfandBG – total amount per tranche
Presence in electronic media: Reuters: LBBW; Bloomberg: LBBW
Contacts:
Bond Trading Jürgen Motzer Tel.: +49 711 127-75328 Juergen.Motzer@LBBW.de
Treasury Jörg Huber Tel.: +49 711 127-78741 Joerg.Huber@LBBW.de
Capital Markets Günter Gleumes Tel.: +49 711 127-75300 Guenter.Gleumes@LBBW.de

128
Landesbank Berlin AG is a universal bank headquartered in the German capital. Its business model is
built on four pillars: Retail Banking and Regional Corporate Banking, in which the Bank has an excellent
position as an innovative, customer-oriented bank; Capital Markets, for which we offer selected activities
and Real Estate Financing, which is focused on the requirements of investors and residential development
companies throughout Germany. Retail Banking benefits from the comprehensive sales network of
Berliner Sparkasse. The Bank’s traditional branch-based services are rounded off by modern sales channels.
Our banking products for pensions, asset accumulation, consumer and real-estate financing as well
as payment transactions and liquidity management enable us to provide our clients with an extensive
offering. In Regional Corporate Banking, Landesbank Berlin has a leading position as a banking partner
for business people and small and medium-sized enterprises. Experienced advisors based in Landesbank
Berlin’s Regional Corporate Banking divisions and in Berliner Sparkasse’s Regional Corporate Banking
Centres provide competent and individual support. The Regional Corporate Banking range of services is
rounded off by the Competence Centres for Leasing and Factoring, International Banking, Start-ups and
Business Succession as well as Electronic Banking. Landesbank Berlin combines its expertise in providing
financing solutions for commercial real estate projects in the Real Estate Financing division. Investors,
residential development companies, asset management companies and real estate funds as well as
selected developers in Germany and in selected European markets are supported with both brands,
namely Landesbank Berlin and Berlin Hyp. In Germany, the Landesbank Berlin Group ranks as one of
the largest providers of commercial real estate financing. In Capital Markets business, Landesbank Berlin
attends particularly to financial institutions and institutional investors. The bank is also established as
an expert provider of capital market products for private investors as well. We maintain an extensive
network of trading partners and thereby offer direct market access to all relevant trading centres.
In LBB-Invest, the bank has a fund provider for private and institutional customers that has established
itself among the leaders of German asset management companies.
Rating: Moody’s Fitch dbrs
Long-term Rating A1 AA - A (high)
Short-term Rating P-1 F1+ R-1 (middle)
Outlook stable stable stable
Financial Strength D+ C/D BBB+
Pfandbriefe
Public Pfandbriefe Aaa AAA –
Mortgage Pfandbriefe Aaa – –
Selected financial figures
Total assets
Mortgage loan portfolio
Public-sector loan portfolio
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefee
Unsecured bonds
Own funds as shown in the balance sheet – total –
Core capital (without net income)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expenditure
Operating result before provisions for risks
Provisions for risks
Operating result after provisions for risks
Expenditure from profit transfer
Income for the year
*all values based on the individual account
2010
€ million
99,186
1,788
7,461
24,239
2,567
2,684
18,988
4,130
2,861
0
1,263
736
843
183
27
156
286
0
2009
€ million
104,981
1,612
10,063
32,136
2,365
3,434
26,337
4,372
2,857
0
1,515
877
862
320
124
196
336
0

Landesbank Berlin AG
Alexanderplatz 2
10178 Berlin
Telephone: +49 30 869 801
Telefax: +49 30 869 830 74
Internet: www.lbb.de
Shareholder:
Landesbank Berlin Holding AG (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
of which further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3) Dec. 31, 2010
4,615
290
2,449
154
993
639
90
55
35
0
1,993
2,111
2,007
100
6
53
3
22
14
2
61
39
76
77
75
5,314
302
2,394
220
1,468
727
203
203
0
0
1,774
1,999
1,799
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 2)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: France
Poland
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
2,781
1,134
1,647
4,391
586
399
1,158
1,224
713
402
1,506
160
148
12
241
477
573
556
100
41
59
88
12
14
42
44
26
14
54
6
93
7
24
25
25
2,666
636
2,030
3,255
562
319
1,126
1,221
767
394
1,394
111
111
0
232
555
616
584
129
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Presence in electronic media: www.lbb.de; Reuters: LBBA, LBB1, LBB2
Contacts:
Head Treasury & Trading: Dirk Kipp Tel.: +49 30 245 626 30 dirk.kipp@lbb.de
Long Term Funding: Christian Schneider Tel.: +49 30 245 667 36 christian.schneider@lbb.de
Liquidity Management: Andrej Schiebler Tel.: +49 30 245 650 56 andrej.schiebler@lbb.de
Investor Relations: Christina Pries Tel.: +49 30 245 663 89 christina.pries@lbb.de

Landesbank Hessen-Thüringen (Helaba) is an important German real estate bank active in both the domestic
and international markets. Its core business lies in the field of commercial financings, especially office
space, retail property, commercial areas and logistics hubs. The Bank takes a distinctly customer-focused
approach to business with a team of highly specialised staff serving customers in the domestic market and
internationally in all of the main European and US markets. From classic loans to structured financings,
the bank offers the entire product and service range for property transactions.
Helaba has a longstanding tradition as a public sector partner. In public-sector lending it offers its customers
the entire range from tailor-made financing solutions and services to active debt management.
Helaba’s main focus here is on German counterparties with an excellent ranking. The bank also holds an
excellent market position with regard to public private partnerships (PPP). In both business segments, its
Mortgage and Public Pfandbriefe play a key role for funding purposes.
The AAA ratings testify to the high quality of the cover assets. The bank’s issuing policy seeks to achieve a
wide diversification of the investor basis. In addition to its domestic issuing activity, Helaba therefore also
banks on international, large-volume benchmark bonds as well as a comprehensive selection of structured
issues.
Rating: Mortgage Public Short-term Long-term Financial strength
Pfandbriefe Pfandbriefe liabilities liabilities Individual
Fitch AAA AAA F1+* A+* B*
Moody‘s – Aaa P-1 Aa2 C–
Standard & Poor‘s – AAA A-1* A* –
* Joint group rating of Sparkassen-Finanzgruppe Hessen-Thüringen
130
Selected key figures
2010
€ million
2009
€ million
Total assets
166,244
169,901
Mortgage loan portfolio
35,778
36,661
Residential loans
6,755
6,735
Commercial loans
29,023
29,926
Mortgage loan commitments
5,099
6,107
Residential loans
590
476
Commercial loans
4,509
5,631
Public-sector loan portfolio
30,856
27,691
Public-sector loan commitments
2,128
1,434
Total funds outstanding (registered and bearer bonds)
85,358
69,358
Mortgage Pfandbriefe
5,794
5,546
Public Pfandbriefe
14,912
13,933
Unsecured bonds
29,888
29,969
Promissory notes
34,765
19,910
Jumbo issues outstanding
1,000
0
Refinancing funds raised
12,945
12,443
Mortgage Pfandbriefe
1,198
1,852
Public Pfandbriefe
2,559
2,446
Unsecured bonds
5,164
5,875
Promissory notes
4,024
2,270
Total Equity
9,691
9,431
Equity
5,203
4,906
Subordinated debt
4,488
4,525
Net interest income
1,017
1,040
Loan loss provisions
-285
-487
Net interest income after provisions for losses and loans
732
542
Net commission income
249
227
Net trading income
148
315
Net income from hedging activities/derivatives
5
92
Result from financial investments
-34
-38
General administrative expenses
-1,068
-1,025
Earnings before tax
398
343
Consolidated net income
298
323

Landesbank Hessen-Thüringen (Helaba)
Neue Mainzer Strasse 52-58
60311 Frankfurt am Main
Telephone: +49 69 913201
Telefax: +49 69 291517
Internet: www.helaba.de
Owners:
Sparkassen- und Giroverband
Hessen-Thüringen (85 %)
State of Hesse (10 %)
Free State of Thuringia (5 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4) Dec. 31, 2010
€ million in %
20,288
13,939
4,987
1,327
11
24
807
2,071
7,881
6,054
1,883
1,593
1,593
0
225
5,602
5,691
5,146
100
69
25
7
0
0
4
10
39
30
9
8
8
0
1
38
36
33
19,535
12,669
6,289
538
1
39
801
1,601
6,587
4,623
4,447
1,476
1,476
0
69
5,671
5,650
5,267
Mortgage cover pool
Dec. 31, 2009
€ million
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
lowest external or internal rating
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
131
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
lowest external or internal rating
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
8,335
1,682
6,653
6,915
1,452
327
1,427
6,581
6,197
967
669
502
560
3,101
3,142
3,004
100
20
80
83
17
4
17
79
74
12
8
6
6
54
52
49
7,208
1,479
5,729
3,070
767
377
1,426
5,405
5,722
938
548
0
1,181
2,843
2,891
2,733
Presence in electronic media:
Reuters: HELABA; Bloomberg: HELA
Contacts:
Asset/Liability Management
Treasury Volker Walz Tel.: +49 69 9132-2798 volker.walz@helaba.de
Funding Martin Gipp Tel.: +49 69 9132-1181 martin.gipp@helaba.de
Debt Investor Relations Alan J. Noble Tel.: +49 69 9132-4104 alan-james.noble@helaba.de
Cover Pool Management Michael Heil Tel.: +49 69 9132-3594 michael.heil@helaba.de
Capital Markets
Money Markets Volker Schmidt Tel.: +49 69 9132-5059 volker.schmidt@helaba.de
Derivates Gerhard Heiler Tel.: +49 69 9132-1881 gerhard.heiler@helaba.de

M.M.Warburg & CO Hypothekenbank AG offers mortgage, ship and public-sector loans. Its operations
focus on commercial properties as well as on residential, office and retail premises in Germany’s metropolitan
areas. Moreover, acting jointly with other specialist companies of the Warburg Group, Warburg
Hyp is also in a position to provide complex project financing as well as other services and products from
the real estate value added chain. Strict risk management procedures are in place to ensure the high
recoverability of the cover assets. Warburg Hyp refinances itself by issuing registered and bearer Pfandbriefe;
the volume of individual issues ranges between € 2 million and € 20 million, with maturities of
up to 10 years. Besides fixed-rate Pfandbriefe, the bank also offers floating-rate Pfandbriefe on a Euribor
basis. Bank bonds and money market transactions round up Warburg Hyp’s product portfolio for refinancing
its lending activities.
Selected key figures
2010
€ million
2009
€ million
Total assets
1,551
1,775
Mortgage loan portfolio
1,211
1,110
Residential loans
186
174
Commercial loans
1,025
936
of which cross-border
19
12
Mortgage loan commitments
185
198
Public-sector loan portfolio
228
288
of which cross-border
0
0
132
Public-sector loan commitments
of which cross-border
47
0
6
0
Ship loan portfolio
32
73
of which cross-border
0
0
Ship loan commitments
0
6
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
1,197
1,135
Mortgage Pfandbriefe
805
806
Public Pfandbriefe
164
210
Ship Pfandbriefe
0
3
Other Refinancings
228
116
Jumbo issues outstanding
0
0
Refinancing funds raised
241
193
Mortgage Pfandbriefe
127
188
Public Pfandbriefe
0
5
Ship Pfandbriefe
0
0
Unsecured bonds
10
0
Promissory notes
104
0
Own funds as shown in the balance sheet – total –
80
80
Core capital (without net income)
40
40
Profit-sharing capital
28
28
Subordinated liabilities
12
12
Net interest income
9
8
Administrative expenditure
5
5
Operating result before provisions for risks
4
3
Provisions for risks
0
-1
Operating result after provisions for risks
4
4
Income for the year
4
4
Presence in electronic media: Reuters: MMWB 15
Contacts:
Klaus Rüpke Tel.: +49 40 355334-60 klaus.ruepke@warburghyp.de
Oliver Grellmann Tel.: +49 40 355334-61 oliver.grellmann@warburghyp.de

M.M.Warburg & CO Hypothekenbank AG
Colonnaden 5
20354 Hamburg
Telephone: +49 40 355334-0
e-mail: warburg.hyp@warburghyp.de
Internet: www.warburghyp.de
Shareholder:
M.M.Warburg & CO KGaA (100 %)
Public-sector cover pool
Dec. 31, 2009
€ million in %
Dec. 31, 2008
€ million
Nominal volume 1)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
186
0
5
0
181
0
23
22
21
100
0
3
0
97
14
13
12
244
0
0
0
244
0
0
34
36
35
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2009
€ million in %
Dec. 31, 2008
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
823
131
692
179
187
13
333
477
678
47
86
12
12
40
59
62
53
100
16
84
49
51
2
40
58
83
6
10
1
5.1
7.3
7.2
5.9
792
119
673
176
182
13
309
470
671
38
71
12
62
48
53
43
133
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
Ship cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
0
Nominal volume 1)
risk adjusted net present value 4) 0
by average loan size (actual balance) 5) up to € 0.3 million
0
from more than € 0.3 million up to € 5.0 million
0
over € 5.0 million
0
Countries of registry Germany
0
Further cover assets 3) nominal
0
Over-collateralization nominal
0
net present value
0
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
0
0
0
0
0
0
0
0
0
13
0
13
0
13
1
10
11
10

Münchener Hypothekenbank works within the Cooperative Financial Network as a partner to the Volksbanken
and Raiffeisenbanken, with the result that, indirectly, the Bank has access to one of the most
extensive branch networks in Germany. Its primary function consists in strengthening the cooperative
banks in a competitive environment via long-term fixed interest financing.
The bank is mone of Germany’s largest credit cooperatives specializing in long-term financing of private
and commercial real estate within Germany and abroad. In the mortgage business, the bank’s main focus
is on residential property financing. With its Pfandbriefe, MünchenerHyp offers private and institutional
investors an ideal combination of earnings and safety.
Rating: Mortgage Public Short-term Long-term Financial
Pfandbriefe Pfandbriefe liabilities liabilities strength
Moody’s Aaa Aaa Prime-1 A1 C-
Selected key figures
2010
€ million
2009
€ million
Total assets
35,225
35,733
Mortgage loan portfolio
18,455
16,591
Mortgage loan commitments
3,553
1,902
Public-sector loan portfolio
9,825
10,518
Public-sector loan commitments
1,349
912
Total funds outstanding (registered and bearer bonds)
30,690
30,491
134
Mortgage Pfandbriefe
Public Pfandbriefe
14,110
10,493
13,704
11,244
Unsecured bonds
4,125
3,818
Promissory notes
1,962
1,725
Jumbo issues outstanding
9,950
9,450
Refinancing funds raised
8,268
9,366
Mortgage Pfandbriefe
5,513
5,453
Public Pfandbriefe
1,092
487
Unsecured bonds
1,241
2,906
Promissory notes
422
520
Own funds as shown in the balance sheet – total –
1,212
1,153
Core capital (without net income)
780
763
Profit-sharing capital
21
21
Subordinated liabilities
194
156
Net interest income
125
133
Administrative expenditure
59
59
Operating result before provisions for risks
32
41
Provisions for risks
16
12
Operating result after provisions for risks
17
29
Income for the year
11
11
Presence in electronic media: Reuters: MHB01; Bloomberg: allgemein
GIS: Seite 600, 610, 611, 613-620, 630-636, 640-647
Contacts:
Rafael Galuszkiewicz Tel.: +49 89 5387-106 rafael.galuszkiewicz@muenchenerhyp.de
Richard-Peter Leib Tel.: +49 89 5387-127 richard-peter.leib@muenchenerhyp.de
Claudia Bärdges-Koch Tel.: +49 89 5387-110 claudia.baerdges-koch@muenchenerhyp.de
Patryk Ferner Tel.: +49 89 5387-104 patryk.ferner@muenchenerhyp.de
Tobias Haensse Tel.: +49 89 5387-108 tobias.haensse@muenchenerhyp.de
Josef Riedelsheimer Tel.: +49 89 5387-208 josef.riedelsheimer@muenchenerhyp.de
Michael Schäffler Tel.: +49 89 5387-105 michael.schaeffler@muenchenerhyp.de
Marcel Watzdorf Tel.: +49 89 5387-107 marcel.watzdorf@muenchenerhyp.de

Münchener Hypothekenbank eG
Karl-Scharnagl-Ring 10
80539 Munich
Telephone: +49 89 5387-800
Telefax: +49 89 5387-900
e-mail: serviceteam800@muenchenerhyp.de
Internet: http://www.muenchenerhyp.de
Members:
83,782 cooperative members
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
50 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
9,825
3,202
3,272
465
199
2,687
0
4,647
1,359
1,897
0
1,922
1,673
249
6,470
1,840
1,416
99
1,148
525
810
703
100
32.6
33.3
4.7
2.0
27.4
0.0
47.3
13.8
19.3
0.0
19.6
87.0
13.0
65.9
18.7
14.4
1.0
5.3
8.2
7.2
10,518
3,052
4,224
668
100
2,474
71
4,227
1,579
2,762
0
1,879
1,455
424
5,503
2,360
2,495
160
1,140
769
888
860
135
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
14,634
10,767
3,867
123,874
2,370
8,407
2,349
3,878
9,524
811
524
3,775
120
188
53
234
34
3,146
1,569
2,158
2,824
2,290
100
73.6
26.4
98.1
1.9
57.4
16.1
26.5
65.1
5.5
3.6
25.8
3.2
5.0
1.4
6.2
0.9
83.3
14.7
19.3
15.6
13,774
9,829
3,945
105,705
2,320
7,692
2,178
3,904
9,589
787
503
2,895
92
230
64
247
30
2,232
1,469
2,293
2,841
2,125
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche

NORD/LB is the leading universal bank in North Germany. Its business policy is concentrated on North
Germany. NORD/LB functions as the Landesbank for the federal states Lower Saxony and Saxony Anhalt.
It also acts as the central bank for 46 savings banks in Lower Saxony (13 supported by Bremer Landesbank),
13 savings banks in Saxony-Anhalt and 10 savings banks in Mecklenburg-Western Pomerania.
NORD/LB is Germany’s top bank for national and international bond issues. It offers a wide range of
financial services to its private, corporate and institutional clients and to the public sector. The main areas
of specialisation of NORD/LB are agricultural and real estate banking, corporate finance, ship and aircraft
financing and private banking. In Braunschweig, NORD/LB can boast a regional savings bank tradition
stretching back over more than 241 years.
As an international commercial bank, NORD/LB maintains a presence in all the major financial and trading
centres, including London, Singapore and New York. It has representations and service offices worldwide
and a network of more than 1,500 correspondent banks. Since January 2008 Deutsche Hypo forms part
of NORD/LB. By combining the power of the two banks, a stronger position on the market for clients and
investors in the field of commercial real estate financing will be attained.
Rating: Mortgage Public Non-guaranteed Non-guaranteed Financial
Pfandbriefe Pfandbriefe short-term liabilities long-term liabilities strength
Standard & Poor‘s - - - - -
Moody‘s Aaa Aaa P-1 Aa2 C–
Fitch - - F1 A C/D
136
Selected key figures
Total assets (Group)
2010
€ million
228,586
2009
€ million
238,688
Total assets AöR
150,792
158,091
Mortgage loan portfolio
5,460
5,635
Mortgage loan commitments
418
899
Public-sector loan portfolio
17,670
17,595
Public-sector loan commitments
2,106
3,356
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
2,682
3,567
Public Pfandbriefe
28,739
33,667
Unsecured bonds
32,233
33,937
Jumbo issues outstanding
3,000
6,950
Refinancing funds raised
Ship Pfandbriefe
10
0
Mortgage Pfandbriefe
50
1,025
Public Pfandbriefe
2,954
4,773
Unsecured bonds
5,998
19,127
Promissory notes
653
2,378
Own funds as shown in the balance sheet – total –
Core capital (without net income)
5,818
5,762
Fund for general banking risks
852
722
Profit-sharing capital
401
447
Subordinated liabilities
2,704
2,103
Net interest income incl. depreciation on fixed assets and intangible assets
1,271
1,249
Administrative expenditure
680
736
Operating result before provisions for risks
901
875
Provisions for risks
-524
-733
Operating result after provisions for risks
377
142
Income for the year
98
18
Presence in electronic media:
Reuters: NORDLB, Bloomberg: NOLB
Contact:
Martin Hartmann, Head of Markets Tel.: +49 511 361-2052 martin.hartmann@nordlb.de
Wolfgang Göhlich, Head of Treasury Tel.: +49 511 361-2864 wolfgang.goehlich@nordlb.de

Nord/LB Norddeutsche
Landesbank Girozentrale
Friedrichswall 10
30159 Hanover
Telephone: +49 511 361-0
Telefax: +49 511 361-2502
e-mail: info@nordlb.de
Internet: www.nordlb.de
Owners:
State of Lower Saxony (41.75 %)
S-Finanzgruppe Sparkassenverband
Niedersachsen (37.25 %)
State of Saxony Anhalt (8.25 %)
Sparkassenbeteiligungsverband Sachsen-Anhalt (7.53 %)
Sparkassenbeteiligungszweckverband Mecklenburg-
Vorpommern (5.22 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by borrowers
German Federal Government and Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
Further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3) 2,181
22,687
6,158
4,404
11,589
0
536
536
1,877
3,862
3,768
3,264
100
27,14
19,41
51,08
0,00
2,36
2,36
18,66
16,91
15,97
23,082
4,924
3,662
13,380
0
1,116
1,116
2,740
3,571
3,435
2,683
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by average loan size (actual balance) 5)
up to € 0.5 million
from more than € 0.5 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries (incl. securing excess cover)
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
1,071
1,110
832
434
915
1,517
285
108
271
166
1,314
1,392
1,325
100
49.11
50.89
38.15
19.90
41.95
69.56
13.07
4.95
12.43
127.20
127.59
130.54
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG 2) Mortgage cover pool according to PfandBG
4)
pursuant to § 19, par. 1 PfandBG 4) according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
2,287
1,020
1,267
808
428
1,051
1,748
204
127
208
182
1,330
1,410
1,346
137
Ship cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by average loan size (actual balance) 2) up to € 0.5 million
from more than € 0.5 million up to € 5.0 million
over € 5.0 million
Countries of registry Germany
Netherlands
Greece
Malta
Cyprus
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
668
1
133
534
513
–
–
–
155
39
597
612
453
100
0.15
19.91
79.94
76.80
–
–
–
23.20
542.73
561.47
427.36
708
0
38
670
592
0
0
0
116
19
227
253
140
1)
without “further cover assets” pursuant to § 26, par. 1 PfandBG
2)
pursuant to § 28, par. 4 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 26, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization

Landesbank Saar, Saarbrücken (SaarLB) has successfully positioned itself as the Franco-German SME
bank. Boasting EUR 19 billion in total assets, it is the largest financial institution in the Saarland region.
The Bank’s core markets are the German state of Saarland and in the neighbouring regions of France,
particularly in the country’s prosperous northeast.
SaarLB’s activities are geared toward small and medium-sized enterprises, HNWI customers and customers
seeking commercial real estate financing. With its “cross-border” market knowledge, the Bank is familiar
with the customary business practices and legal norms in both Germany and France. Its customers are
served by bilingually-trained staff.
SaarLB also provides financing for mainly regional public-sector budgets and for renewable energy
projects. The Bank is authorised to issue Pfandbriefs, in accordance with the German Pfandbrief Act, as
well as other bonds, and is a member in the Association of German Pfandbrief Banks (vdp).
As the central bank to the Saarland savings banks, and in its capacity as associated partner of the Sparkassen-Finanzgruppe
Saar, SaarLB conducts vigorous syndicate business with the regional savings banks.
It is also a centre of competence, particularly in corporate finance, securities transactions and international
commercial business.
Rating: Mortgage Public Non-guaranteed Non-guaranteed Financial
Pfandbriefe Pfandbriefe short-term liabilities long-term liabilities strength
Moody‘s – – P-1 A1 D
Fitch – – F1 A D
138
Selected key figures
Total assets
2010
in Mio. €
19,064
2009
in Mio. €
18,740
Mortgage loan portfolio
2,865
2,774
Public-sector loan portfolio
2,353
1,372
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe incl. Ship Pfandbriefe
473
530
Public Pfandbriefe
2,176
2,295
Unsecured bonds
3,380
3,481
Jumbo issues outstanding
0
0
Refinancing funds raised 1)
Ship Pfandbriefe
0
0
Mortgage Pfandbriefe
85
25
Public Pfandbriefe
325
170
Unsecured bonds
45
0
Promissory notes
0
0
Own funds as shown in the balance sheet – total –
Core capital (without net income)
758
758
Profit-sharing capital
82
140
Subordinated liabilities
144
180
Net interest income
111
164,0
Administrative expenditure
-72
-69,0
Operating result before risk provisions and valuation
61
105,0
Provisions for risks
35
72,0
Operating result after risk provisions and valuation
31
29,0
Income for the year
0
0
1)
only securitized liabilities
Presence in electronic media: Reuters, Bloomberg
Contacts:
Treasury Joachim Schäfer Tel.: +49 681 383-1521 joachim.schaefer@saarlb.de
Funding Hans-Peter Arweiler Tel.: +49 681 383-1685 hans-peter.arweiler@saarlb.de
Investor Relations Dieter Gläsener Tel.: +49 681 383-1362 dieter.glaesener@saarlb.de

SaarLB
Landesbank Saar
Ursulinenstraße 2
66111 Saarbrücken
Telephone: +49 681 383-01
Telefax: +49 681 383-1200
Internet: www.saarlb.de
Owners:
BayernLB (49.9 %)
Saarland (35.2 %)
Sparkassenverband Saar (14.9 %)
Public-sector cover pool 1)
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 2)
by borrowers
German Federal Government and Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
by weighting 0 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
2,513
441
371
1,701
0
2,513
115
1,039
1,081
1,050
100
17
15
68
65
65
68
2,409
426
377
1,606
0
2,409
117
649
679
646
1)
without old loans pursuant to § 50 PfandBG
2)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool 1)
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 2)
by property types
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany
France
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
293
28
265
2
168
123
125
168
10
97
101
97
100
10
90
1
57
42
43
57
47
47
48
322
32
290
2
134
186
71
251
10
216
224
218
139
1)
without old loans pursuant to § 50 PfandBG
2)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche

In 2000, SEB AG became the German subsidiary of one of Northern Europe’s most pre-eminent financial
services groups which is based in Sweden. The core business lies in the field of banking, financial and
insurance services for companies, institutions and real estate clients. Across Europe, SEB Group has more
than 4 million customers and runs the banking business in more than 375 branches.
In 2005 SEB harnessed the business opportunities that had opened up under the new Pfandbrief Act. It
was the first German commercial bank to be granted a Pfandbrief license from BaFin (Federal Financial
Supervisory Authority). In this context, a merger between former subsidiary SEB Hypothekenbank AG and
its parent SEB AG took place, thus effectively aggregating both banks’ respective commercial real estate
financing, private real estate finance as well as their respective activities in the field of public sector loans.
This also led to a widening of the basis for funding by means of SEB Pfandbriefe.
Rating: Public Mortgage Short-term Long-term
Pfandbriefe Pfandbriefe liabilities liabilities
Moody‘s Aa1 Aa1 P-2 Baa1
Standard & Poor‘s – – A-2 A-
Selected key figures
2010
€ million
2009*
€ million
Total assets
49,082
52,743
Real estate financings
11,370
12,108
Residential loans
7,794
8,167
Commercial loans
3,547
3,941
140
of which cross-border
New mortgage loans
802
1,052
744
704
Residential loans
416
479
Commercial loans
636
225
of which cross-border
3
4
Public-sector loan portfolio
3,441
4,475
of which cross-border
96
180
New public-sector loans
210
227
of which cross-border
1
0
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
3,526
3,764
Public Pfandbriefe
5,756
9,177
Jumbo issues outstanding
2,000
5,125
Pfandbriefe issued
Mortgage Pfandbriefe
434
1,604
Public Pfandbriefe
750
0
Own funds as shown in the balance sheet – total –
Core capital (without net income)
2,321
2,409
Profit-sharing capital
35
52
Subordinated liabilities
16
23
Net interest income
252
224
Administrative expenditure
183
156
Operating result before provisions for risks
48
76
Provisions for risks
15
30
Operating result after provisions for risks
33
46
Result from discontinued operation
-119
-61
Income for the year
-86
-15
Profit transfer
0
-74
* According to IFRS 5 discontinued Operations
Presence in electronic media: Reuters, Bloomberg
Contact:
Karl Borgmeyer Tel.: + 49 69 258 6772 E-Mail: Karl.Borgmeyer@seb.de

SEB AG
Ulmenstrasse 30
60325 Frankfurt am Main
Telephone: +49 69 258-0
Telefax: +49 69 258-6409
Internet: www.SEB.de
Shareholder:
SEB AB, Stockholm (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
0 %
10 %
20 %
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
6,242
2,008
3,385
776
0
73
0
2,405
4
2,934
173
726
605
121
2,960
69
3,213
295
687
623
594
100
32.17
54.23
12.43
0.00
1.17
0.00
38.53
0.06
47.00
2.77
11.63
47.42
1.11
51.47
9,149
3,160
4,809
1,098
0
82
0
3,313
100
4,483
159
1,094
978
116
4,723
184
4,242
540
485
416
301
141
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types*
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization** nominal
net present value
risk adjusted net present value 4)
3,806
1,678
2,128
2,796
2,136
660
35
1,029
2,742
1,971
416
890
529
701
951
909
993
100
44.09
55.91
76.39
23.61
0.92
27.04
72.04
51.79
10.93
23.38
13.90
4,963
3,652
1,311
29,387
29,017
370
2,111
1,063
1,789
3,433
709
821
0
100
1,274
1,429
1,461
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
* Totals may deviate due to rounding
** The difference between cover assets (incl. further cover assets and securing excess cover as well as the discount according to
§ 4, para. 2 sent. 4 Pfandbrief Act) and Mortgage Pfandbrief.
Remark regarding the mortgage cover pool: the percentage share refers to the nominal volume or the total number of cover assets.

Sparkasse KölnBonn dates back to a merger on 1 January 2005 between Stadtsparkasse Köln and
Sparkasse Bonn. With total assets of € 29,3 billion (1) it is Germany’s largest public-sector savings bank.
For capital market funding purposes, Sparkasse KölnBonn utilizes the entire range of refinancing instruments.
Since 1995, the Bank has its own counterparty credit rating from Moody’s and since 1998, it has its
own Debt Issuance Programme. The type, terms and size of its issues are geared to the specific requirements
of institutional investors.
In 2002 Stadtsparkasse Köln issued the first Public Pfandbrief out of a savings bank. This was followed
by the first Mortgage Pfandbrief in 2004.
(1)
All data provided as at 31 December 2010
Rating: Category Moody‘s
Outlook
Stable
Bank Deposits
A1/P-1
Bank Financial Strength D-
Public-sector Pfandbriefe
Aaa
Mortgage Pfandbriefe -Dom Curr Aaa
Senior Unsecured
A1
Subordinate -Dom Curr
Baa2
Other Short Term -Dom Curr P-1
142
Selected Financial Data
Total assets
Mortgage loan portfolio 1)
Mortgage loan commitments 2)
Public-sector loan portfolio 3)
Public-sector loan commitments
Total funds outstanding 4) (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expense
Operating result before provisions for risks
Provisions for risks
Operating result after provisions for risks
Income for the year
2010
€ million
29,335
9,315
1,361
1,650* 1
2* 2
3,882
1,071
660
887
1,264
1,000
120
20
0
50
50
2,405
1,292
514
599
420* 3
424* 3
210* 3
73* 3
137* 3
60* 3
2009
€ million
29,593
8,801
1,516
2,143* 1
1,24* 2
4,892
1,056
801
1,451
1,589
–
591
540
14
36
1
2,465
1,337
454
674
469* 3
454* 3
64* 3
162* 3
-98* 3
-119* 3
1)
balance sheet postion ”secured by mortgages“
2)
commitments ”property finance“ (wider definition than pos. 1)
3)
balance sheet position ”public-sector loans“ = loans to domestic and cross-border public-sector entities
4)
savings banks certificates not included
*1
from balance sheet item Assets 4. Claims on customers of which Loans to public authorities and entities
*2
from VKC 533/1
*3
Source: Unconsolidated Financial Statements according to HGB accounting standards (HGB - German Commercial Code)
Presence in electronic media: Reuters: SPKOB; Bloomberg: SPKKB
Contact:
Ralf Rutemöller Tel.: +49 221 226-96276 E-Mail: ralf.rutemoeller@sparkasse-koelnbonn.de

Sparkasse KölnBonn
Hahnenstrasse 57
50667 Cologne
Telephone: +49 221 226-0
Telefax: +49 221 240 1473
e-mail: kontakt@sparkasse-koelnbonn.de
Internet: www.sparkasse-koelnbonn.de
Owner:
Zweckverband Sparkasse KölnBonn
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
1,292
Nominal volume 1)
762 100
risk adjusted net present value 4) 104 15.52
478
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
534
203
25
0
0
70.08
26.64
3.28
0.00
0.00
719
483
80
10
0
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
by weighting
10
3
0
512
140
97
77
20
1.31
0.39
0.00
67.19
18.37
12.73
10.10
2.62
10
33
30
786
159
274
242
32
0 %
10 %
20 %
100 %
525
0
149
88
68.90
0.00
19.55
11.55
952
249
91
0
Further cover assets 3)
Over-collateralization
nominal
nominal
net present value
0
102
107
0.00
15.45
14.84
0
491
523
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
143
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
2,513
1,351
1,162
15,718
4,211
1,199
1,144
170
2,433
43
37
0
470*
1,912
2,050
1,942
100
53.76
46.24
78.87
21.13
47.71
45.52
6.76
96.82
1.71
1.47
178.52
174.47
186.73
3,021
1,619
1,402
22,218
1,799
1,421
1,310
290
2,857
118
46
0
31
1,996
2,128
2,002
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranches
* incl. liquidity cushion € 439 mn.

UniCredit Bank AG - HypoVereinsbank (former Bayerische Hypo- und Vereinsbank AG) is one of the leading
financing institutions in Europe. The bank ist part of the UniCredit Group which holds the leading position in
Europe with 162,000 employees and about 10,000 branches in 22 countries. HypoVereinsbank is one of the
largest private banks in Germany with almost 20,000 employees and 780 branches. The core competencies
cover retail banking, corporate banking for small, medium sizes and large, internationally active corporate
customers, private banking and international capital markets.
The bank offers its clients the entire product range covering all aspects of real estate financing. For professional
real estate clients, the bank provides all innovative products and services in the field of real estate in
addition to classic real estate financing. The bank ist committed to their regional origins. At the same time, as
a fully integrated member of UniCredit Group and leading European bank, the bank wants to develop a strong
cultural identity. In this context, the company name is being changed from Bayerische Hypo- und Vereinsbank
Aktiengesellschaft to UniCredit Bank AG to reflect the identity and branding of UniCredit Group.
Rating: Mortgage Public Short-term Long-term Financial
Pfandbriefe Pfandbriefe liabilities liabilities strength
Fitch AAA* AAA F1+ A+ C
Moody’s Aa1 Aaa P-1 A1 C –
Standard & Poor’s – AAA A-1 A –
*on review for possible downgrade since January 2010
144
Selected key figures
Total assets
Mortgage loan portfolio
Mortgage loan commitments
Public-sector loan portfolio
Public-sector loan commitments*
Total funds outstanding* (registered and bearer bonds)
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Jumbo issues outstanding
Refinancing funds raised*
Mortgage Pfandbriefe
Public Pfandbriefe
Unsecured bonds
Promissory notes
Own funds as shown in the balance sheet – total –
Core capital (without net income)
Profit-sharing capital
Subordinated liabilities
Net interest income
Administrative expenditure
Operating result before provisions for risks
Provisions for risks
Operating result after provisions for risks
Income for the year
2010
€ million
381,607
47,903
3,448
13,744
1,171
37,839
27,435
6,047
4,357
9,272
13,375
4,078
1,466
650
1,438
524
22,823
19,354
205
3,264
4,160
-3,172
2,243
-405
1,838
1,270
2009
€ million
309,076
53,428
2,651
14,425
1,171
51,307
30,562
7,161
3,907
9,677
15,250
7,605
1,739
1,585
3,036
1,245
24,732
19,334
205
5,193
4,832
-3,841
3,459
-1,058
2,401
1,633
* Mortgage bank business
Presence in electronic media: Reuters: HVMG; Bloomberg: HVM GR
Contacts:
Bond Trading: Karl-Heinz Riehm Tel.: +49 89 378-14181 karl-heinz.riehm@unicreditgroup.de
Treasury: Dr. Thomas Rauch Tel.: +49 89 378-14156 thomas.rauch@unicreditgroup.de
Holger Oberfrank Tel.: +49 89 378-14337 holger.oberfrank@unicreditgroup.de
Capital Markets: Thomas Neupert Tel.: +49 89 378-14099 thomas.neupert@unicreditgroup.de
Rüdiger Jungkunz Tel.: +49 89 378-15885 ruediger.jungkunz@unicreditgroup.de
Martin Schulze Elfringhoff Tel.: +49 89 378-14077 martin.schulzeelfringhoff@unicreditgroup.de
Marco Pidancet Tel.: +49 89 378-15105 marco.pidancet@unicreditgroup.de

UniCredit Bank AG (former Bayerische
Hypo- und Vereinsbank AG)
Kardinal-Faulhaber-Strasse 1
80333 Munich
Telephone: +49 89 378-0
e-mail: info@unicreditgroup.de
Internet: www.hypovereinsbank.de
Shareholder:
UniCredit S.p.A., Rom (100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
Further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3)
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
9,361
7
2,202
2,204
294
3,351
1,303
389
914
0
3,412
3,490
3,429
100
0.08
23.52
23.54
3.14
35.8
13.92
4.16
9.76
0
36.45
37.28
36.63
9,762
8
2,437
2,238
168
3,489
1,422
430
992
0
2,706
2,793
2,775
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 4)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
Further cover assets 2) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 3)
29,306
21,019
8,287
267,077
15,848
16,531
8,312
4,463
22,642
4,658
1,995
11
2
3
6
2,743
5,216
5,469
5,378
100
71.72
28.28
94.4
5.6
56.41
28.36
15.23
77.26
15.89
6.81
0.04
0.01
0.01
0.02
9.36
17.8
18.66
18.35
32,055
23,350
8,705
297,696
17,476
18,723
8,966
4,366
24,747
5,202
2,094
12
0
2
1
3
0
6
2,313
4,494
4,692
4,550
145
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 20, par. 2 PfandBG
3)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
4)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche

VALOVIS BANK AG, together with its subsidiaries Valovis Commercial Bank AG and Universum Inkasso
GmbH, is your reliable partner in financial matters. On 1 April 2009 the VALOVIS BANK AG carried out
a one-hundred percent takeover of the Valovis Commercial Bank AG and the Universum Inkasso GmbH.
The sole owner of our Company Group is the KarstadtQuelle Mitarbeitertrust e.V. With the incorporation
of the Valovis Commercial Bank AG an expansion of the VALOVIS Group into the area of retail banking
has taken place. Alongside the original business areas of real estate financing and consumer factoring
there is now the area of consumer finance, with a special focus on the credit card business. As a result
the VALOVIS Group is well positioned for the future as an independent financial service provider.
Selected key figures (IFRS)
2010
€ million
2009
€ million
Total assets
5,003
5,198
Mortgage loan portfolio
1,717
1,785
Residential loans
137
456
Commercial loans
1,580
1,329
of which cross-border
0
0
Mortgage loan commitments
123
137
Residential loans
10
43
Commercial loans
113
94
of which cross-border
0
0
Public-sector loan portfolio
0
0
146
of which cross-border
Public-sector loan commitments
0
0
0
0
of which cross-border
0
0
Total funds outstanding (registered and bearer bonds)
0
0
Mortgage Pfandbriefe
0
0
Public Pfandbriefe
0
0
Unsecured bonds
0
0
Jumbo issues outstanding
0
0
Refinancing funds raised
2,007
2,185
Mortgage Pfandbriefe
1,229
1,259
Public Pfandbriefe
0
51
Unsecured bonds
0
0
Promissory notes
778
875
Own funds as shown in the balance sheet – total –
Core capital (without net income)
277
245
Profit-sharing capital
0
0
Subordinated liabilities
0
0
Net interest income
51
26
Administrative expenditure
80
69
Operating result before provision for risks
-49
64
Provision for risks
-20
-31
Operating result after provision for risks
-69
33
Income for the year
-51
37

VALOVIS BANK AG
Theodor-Althoff-Strasse 7
45133 Essen
Telephone: +49 201 2465-9800
Telefax: +49 201 2465-9899
e-mail: info@valovisbank.com
Internet: www.valovisbank.com
Legal Owner:
KarstadtQuelle Mitarbeiter Trust e.V.
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by property types
residential
commercial
by number of cover loans
residential
commercial
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
by regional distribution
Germany West
Germany East
Berlin
Other countries
Further cover assets 3) nominal
Over-collateralisation nominal
net present value
risk adjusted net present value 4)
1,269
296
973
1,165
125
160
229
880
897
163
209
0
190
325
233
260
100
23.3
76.7
90.3
9.7
12.6
18.1
69.3
70.7
12.8
16.5
0.0
1,432
312
1,120
1,455
119
196
204
1,032
1,077
151
204
0
190
424
211
288
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralisation
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
147

Westdeutsche ImmobilienBank AG (WestImmo) is a bank specialized in commercial real estate financing and
structured real estate transactions.
It is one of the leading real estate financiers in Germany and maintains a strong presence in the western, central
and eastern European markets as well as in North America and Japan.
WestImmo supports national and international investors who invest in their local markets and abroad. Its customers
particularly include institutional investors, real estate companies, real estate corporates and small and
medium-sized companies. The bank finances office, commercial and residential property as well as shopping
centres, hotels, logistics facilities and public buildings.
The product portfolio of WestImmo comprises an individualised and innovative range of products and services.
It is continually proving this with its property and project financing, real estate structured finance, portfolio
financing.
As an issuer of Pfandbrief and debentures, WestImmo stands for stability and reliability. WestImmo’s Pfandbriefe
have been given the top AAA score by ratings agency Standard & Poor’s (S&P). WestImmo is a fully-owned subsidiary
of WestLB AG. In addition to the headquarters in Mainz, the company also has offices in Berlin, Düsseldorf,
Hamburg, Munich and Münster and is represented in London, Madrid, New York, Paris, Prague, Tokyo
and Warsaw.
Rating: Mortgage Public Short-term Long-term
Pfandbriefe Pfandbriefe liabilities liabilities
Standard & Poor’s AAA AAA A-2 BBB+
Selected key figures
2010
€ million
2009
€ million
Total assets
25,888
26,890
148
Mortgage loan portfolio
of which cross-border
18,288
10,752
19,400
10,503
Mortgage loan commitments
3,316
6,215
of which cross-border
2,597
4,582
Public-sector loan portfolio 1)
1,542
1,569
of which cross-border
Public-sector loan commitments
of which cross-border
Total funds outstanding (registered and bearer bonds)
18,202
18,918
Mortgage Pfandbriefe
8,634
7,799
Public Pfandbriefe
1.939
2,458
Other funding (unsecured bonds/promissory notes)
7.629
8,660
Jumbo issues outstanding
0
0
Refinancing funds raised
2,305
4,277
Mortgage Pfandbriefe
1,680
2,839
Public Pfandbriefe
0
75
Unsecured bonds
505
548
Promissory notes
120
815
Own funds as shown in the balance sheet – total –
Core capital (without net income)
760
823
Profit-sharing capital
226
236
Subordinated liabilities
235
241
Net interest income 2)
239
218
Administrative expenditure
89
93
Operating result before provision for risks
167
151
Provision for risks
68
65
Operating result after provision for risks
99
85
Income for the year
95
83
1)
without bonds
2)
P&L figures including IFRS 5 aspects
Presence in electronic media: Reuters, Bloomberg
Treasury:
Tobias Ilgen, Head of Treasury Tel.: +49 6131 9280-7360 tobias.ilgen@westimmo.com
Natalie Adam Tel.: +49 6131 9280-7368 natalie.adam@westimmo.com
Maik Römer Tel.: +49 6131 9280-7362 maik.roemer@westimmo.com
Thomas Seckler Tel.: +49 6131 9280-7366 thomas.seckler@westimmo.com
Birgitt Duckgeischel Tel.: +49 6131 9280-7369 birgitt.duckgeischel@westimmo.com
Manfred Thaler Tel.: +49 6131 9280-7363 manfred.thaler@westimmo.com
Björn Siggemann Tel.: +49 6131 9280-7364 bjoern.siggemann@westimmo.com

Westdeutsche ImmobilienBank AG
Grosse Bleiche 46
55116 Mainz
Telephone: +49 6131 9280-7300
Telefax: +49 6131 9280-7200
Internet: www.westimmo.com
Shareholder:
WestLB AG (100%)
Public-sector cover pool
Dec. 31, 2009
€ million in %
Dec. 31, 2008
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
BB/Ba/BB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
Further cover assets 3) nominal
of which: other countries (EU)
Over-collateralization nominal
net present value
risk adjusted net present value 4)
2,173
147
362
72
50
30
1,512
438
1,044
241
370
80
80
89
40
322
390
357
100.0
6.8
16.6
3.3
2.3
1.4
69.6
20.2
48.0
11.1
17.0
3.7
2,547
280
312
194
212
1,549
642
1,139
301
300
165
165
159
247
334
297
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
149
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
9,904
by property types
residential
commercial
by number of cover loans
residential
commercial
3,393
6,511
37,189
36,042
1,147
by average loan size (actual balance) 5)
up to € 0.3 million
from more than € 0.3 million up to € 5.0 million
over € 5.0 million
2,854
1,094
5,956
by regional distribution
Germany West
Germany East
Berlin
Other countries
of which: UK
France
Spain
Benelux countries
Scandinavia
others
4,332
759
376
4,437
1,121
442
273
403
91
2,107
Further cover assets 3)
Over-collateralization
nominal
nominal
net present value
risk adjusted net present value 4)
536
1,805
2,022
1,457
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
5)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
100
34.3
65.7
28.8
11.1
60.1
43.7
7.7
3.8
44.8
20.9
8,863
3,934
4,929
40,608
39,366
1,242
3,371
1,173
4,319
4,851
823
406
2,783
565
220
166
183
35
1,614
270
1,332
1,532
1,124

WestLB is a European commercial bank with strong local roots in North-Rhine-Westphalia, Germany’s
most densely populated federal state. Its consolidated balance sheet total of € 191.5 billion (as at
31 December 2010) makes it one of Germany’s leading financial service providers. In its capacity as the
central banking institution for the savings banks located in North-Rhine-Westphalia and Brandenburg and
as an international commercial bank, it serves as a hub to the global financial markets. At group level,
WestLB’s consolidated payroll totals 4473 full time employees.
Rating: Public Short-term Long-term Financial
Pfandbriefe liabilities liabilities strength
Moody’s Aaa P-1 A3 E+
DBRS F-1 A- D
Selected key figures
2010
€ million
2009
€ million
Total assets
173,310
188,397
Mortgage loan portfolio
0
0
Mortgage loan commitments
0
0
Public-sector loan portfolio
25,170
30,226
Public-sector loan commitments
9,476
8,417
Total funds outstanding (registered and bearer bonds)
134,571
187,790
Public Pfandbriefe
9,610
10,164
150
Unsecured bonds
Promissory notes
30,269
7,139
44,059
17,018
Other funds
87,553
116,549
Jumbo issues outstanding
4,075
4,525
Refinancing funds raised
13,468
28,294
Public Pfandbriefe
2,332
3,383
Unsecured bonds
10,271
22,862
Promissory notes
865
2,049
Own funds as shown in the balance sheet – total –
6,651,6*
6,693*
Core capital (without net income)
4,506
4,841
Profit-sharing capital
471
738
Subordinated liabilities
2,322
2,522
Net interest income
1,178
1,396
Administrative expenditure
953
1,117
Operating result before provisions for risks
43
334
Provisions for risks
102
623
Operating result after provisions for risks
-59
-289
Income for the year
0
-295
* excluding silent participation by SoFFin of € 1.5 billion per 04 th of Jan 2010

WestLB AG
Herzogstrasse15
40217 Düsseldorf
Telephone: +49 211 826-0
www.westlb.com
www.westlbmarkets.de/pfandbriefe
Shareholders:
RSGV (25.032 %)
WLSGV (25.032 %)
NRW.BANK (30.862 %)
State of North Rhine-Westphalia (17.766 %)
Landschaftsverband Westfalen-Lippe
and Rheinland (each 0.654 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
by ratings 2)
AAA/Aaa/AAA
AA/Aa/AA
A/A/A
BBB/Baa/BBB
without rating
by borrowers
German Federal Government
Federal states (Länder)
Local authorities
Public-sector financial institutions
Others
Other countries
of which: EU
non-EU
Further cover assets 3) nominal
Over-collateralization nominal
net present value
risk adjusted net present value 4)
10,471
4,358
5,812
301
–
–
73
2,909
4,483
1,045
1,393
568
402
861
786
706
100
41.62
55.51
2.87
0.70
27.78
42.81
9.98
13.30
5.42
3.84
11,032
5,013
5,630
289
100
–
155
3,119
4,777
1,122
1,259
600
478
912
803
701
1)
including “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
151
Presence in electronic media: Reuters: WESTLBJUMBO01 ff; Bloomberg: WLBJ; Tradeweb; Bondvision
Contact:
Covered Bonds/Public Finance Thorsten Schetter Tel.: +49 211 826 9755 thorsten_schetter@westlb.de
Investor Relations Barbara Zierfuß Tel.: +49 211 826 2533 barbara_zierfuss@westlb.de
Treasury Thierry Nardon Tel.: +49 211 826 2290 thierry_nardon@westlb.de

WL BANK was founded in Münster (Westphalia) in 1877. The Bank maintains representative offices in Berlin,
Dusseldorf and Munich as well as sales locations in Frankfurt, Hamburg and Heidelberg. As a Pfandbrief
bank, in addition to public-sector lending, WL BANK’s prime focus is on long-term real estate loans. Besides
commercial property finance, its core business also consists in financing property for residential use.
As a member of the German Volksbanken Raiffeisenbanken cooperative financial network, the Bank is a
partner for the commercial and agricultural credit cooperatives. Furthermore, within the WGZ BANK group,
it serves as a centre of competence for public-sector clients. High quality funding provides the basis for a
pricing policy that is both low-cost and marked to market. The bank’s activities are primarily funded by
issuing Pfandbriefe. Besides individual and/or structured issues, there are Jumbo Pfandbrief placements.
Rating: Public Short-term Long-term Financial
Pfandbriefe liabilities liabilities strength
Standard & Poor’s AAA AAA A-1 A+
Fitch – – F1+ A+
Selected key figures
2010
€ million
2009
€ million
Total assets
43,931
43,380
Mortgage loan portfolio
11,221
10,106
Mortgage loan commitments
2,288
2,083
Public-sector loan portfolio
30,797
31,889
Public-sector loan commitments
4,216
6,344
152
Total funds outstanding (registered and bearer bonds)
Mortgage Pfandbriefe
34,766
8,786
35,162
7,703
Public Pfandbriefe
22,366
24,162
Unsecured bonds
2,409
2,110
Promissory notes
1,205
1,187
Jumbo issues outstanding
6,875
7,875
Refinancing funds raised
6,226
8,903
Mortgage Pfandbriefe
1,884
2,104
Public Pfandbriefe
2,887
5,393
Unsecured bonds
1,291
1,271
Promissory notes
164
135
Own funds as shown in the balance sheet – total –
528
502
Core capital (without net income)
350
330
Profit-sharing capital
35
38
Subordinated liabilities
143
134
Net interest income
124
106
Administrative expenditure
41
39
Operating result before provisions for risks
63
51
Provisions for risks
-28
0
Operating result after provisions for risks
35
51
Income for the year
11
26
Presence in electronic media: Reuters: WLBANK
Contacts:
Sascha Aldag, Director Tel.: +49 251 4905-2200 sascha.aldag@wlbank.de
Robert Holl, Deputy Department Director Tel.: +49 251 4905-2240 robert.holl@wlbank.de

WL BANK AG
Westfälische Landschaft Bodenkreditbank
Sentmaringer Weg 1, 48151 Münster
Telephone: +49 251 4905-0
Telefax: +49 251 4905-555
e-mail: info@wlbank.de
Internet: www.wlbank.de
Shareholders:
Wegeno Verwaltungsgesellschaft mbH
(100 % WGZ BANK): 89.904 %
Stiftung Westfälische Landschaft: 4.618 %
Volksbanken und Raiffeisenbanken: 4.548 %
WGZ BANK: 0.926 %
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
24,594
100.0
25,571
by ratings 2)
AAA/Aaa/AAA
5,871
23.9
5,660
AA/Aa/AA
16,088
65.4
17,121
A/A/A
1,945
7.9
1,649
BB
419
1.7
0
BBB/Baa/BBB
271
1.1
1,141
without rating
0
0
0
by borrowers
German Federal Government
336
1.4
71
Federal states (Länder)
7,891
32.0
8,328
Local authorities
7,103
28.9
6,378
Public-sector financial institutions
4,848
19.7
5,814
Others
283
1.2
322
Other countries
4,133
16.8
4,658
of which: EU
3,966
16.1
4,302
non-EU
167
0.7
356
by weighting
0 %
21,199
86.2
21,787
10 %
990
4.0
948
20 %
2,405
9.8
2,836
Further cover assets 3)
Over-collateralization
nominal
nominal
212
2,440
233
1,642
153
net present value
2,380
1,655
risk adjusted net present value 4)
2,181
1,496
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
9,224
100.0
8,210
by property types
residential
7,977
86.5
7,358
commercial
1,247
13.5
852
by number of cover loans
residential
79,160
98.0
76,541
commercial
1,589
2.0
1,566
by average loan size (actual balance) 2)
up to € 0.3 million
4,876
52.8
4,882
from more than € 0.3 million up to € 5.0 million
2,747
29.8
2,343
over € 5.0 million
1,601
17.4
985
by regional distribution
Germany West
7,579
82.2
6,834
Germany East
806
8.7
702
Berlin
826
9.0
661
Other countries
13
0.1
13
of which: UK
0
0.0
0
France
0
0.0
0
Spain
13
0.1
13
Benelux countries
0
0.0
0
Scandinavia
0
0.0
0
others
0
0.0
0
Further cover assets 3)
nominal
739
349
Over-collateralization
nominal
1,189
869
net present value
1,678
1,225
risk adjusted net present value 4)
1,552
1,120
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization

As a universal bank licensed to issue Pfandbriefe (covered bonds under German law), Ludwigsburg-based
Wüstenrot Bank AG Pfandbriefbank (“WBP”) forms part of the Home Loan Savings Bank division of Wüstenrot
& Württembergische Group (“W&W”), alongside Wüstenrot Bausparkasse AG, W&W Group’s savings and home
financing institution. W&W Group are the experts covering the four key elements of modern financial planning:
personal insurance, home loan savings and housing, risk protection, as well as savings and investment. WBP was
created from the merger of Wüstenrot Bank AG and Wüstenrot Hypothekenbank AG. The two banks joined forces
to capitalise on the reformed legal framework created by the new German Pfandbrief Act (Pfandbriefgesetz),
which came into force on 19 July 2005. Within the W&W Group, WBP provides home loan financing to private
customers outside the home loan savings business. Its funding strategy is focused on the capital markets: most
of WBP’s business is refinanced through Pfandbrief issues, but also via customer deposits. In addition, WBP’s
award-winning current account is used by other Group entities to attract and retain customers.
Rating: Mortgage Public Short-term Long-term
Pfandbriefe Pfandbriefe liabilities liabilities
Fitch AAA AAA F2 BBB+
Standard & Poor’s – – A2 BBB+
Selected key figures
2010
€ million
2009
€ million
Total assets
15,463
15,302
Mortgage loan portfolio
9,256
9,418
Residential loans
8,632
8,630
Commercial loans
624
788
of which cross-border
0
0
154
Mortgage loan commitments
Residential loans
788
723
347
314
Commercial loans
65
33
of which cross-border
0
0
Public-sector loan portfolio
1,803
1,514
of which cross-border
482
567
Public-sector loan commitments
884
1,203
of which cross-border
66
387
Total funds outstanding (registered and bearer bonds)
6,128
6,391
Mortgage Pfandbriefe
4,287
4,154
Public Pfandbriefe
5
30
Unsecured bonds
97
169
Promissory notes
1,739
2,038
Jumbo issues outstanding
0
0
Refinancing funds raised
341
858
Mortgage Pfandbriefe
341
858
Public Pfandbriefe
0
0
Unsecured bonds
0
0
Promissory notes
0
0
Own funds as shown in the balance sheet – total –
524
546
Core capital (without net income)
320
320
Profit-sharing capital
75
75
Subordinated liabilities
129
151
Net interest income
108
110
Administrative expenditure
88
83
Operating result before provisions for risks
17
37
Provisions for risks
13
18
Operating result after provisions for risks 1)
4
19
Income for the year 1)
1
18
1)
including compensating payment to W&W AG
Presence in electronic media: Reuters: WUES, WUEST01 - WUEST04; Bloomberg: WBPF, WUES
Contacts:
Head of Treasury Dennis Bach Tel.: +49 7141 16 - 4638 dennis.bach@wuestenrot.de
Deputy Head Michael Conle Tel.: +49 7141 16 - 2842 michael.conle@wuestenrot.de
Deputy Head André Schlieker Tel.: +49 7141 16 - 5197 andre.schlieker@wuestenrot.de
Pfandbriefmanagement Frank Boetzer Tel.: +49 7141 16 - 5665 frank.boetzer@wuestenrot.de
Funding Frank Retzmann Tel.: +49 7141 16 - 2848 frank.retzmann@wuestenrot.de
Bernhard Wischkoni Tel.: +49 7141 16 - 5630 bernhard.wischkoni@wuestenrot.de
Fax: +49 7141 902941

Wüstenrot Bank AG
Pfandbriefbank
Hohenzollernstrasse 46
71630 Ludwigsburg
Telephone: +49 7141 16-1
Telefax: +49 7141 16-4984
Internet: www.wuestenrot.de
Shareholder:
Wüstenrot & Württembergische AG
(100 %)
Public-sector cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
7
100
50
by ratings 2)
AAA/Aaa/AAA
7.0
100.0
50
AA/Aa/AA
0.0
0.0
0
A/A/A
0.0
0.0
0
BBB/Baa/BBB
0.0
0.0
0
without rating
0.0
0.0
0
by borrowers
German Federal Government, Federal states (Länder)
0.0
0.0
45
Local authorities
0.0
0.0
0
Public-sector financial institutions
0.0
0.0
0
Others
7.0
100.0
5
Other countries
0.0
0.0
0
of which: EU
0.0
0.0
0
non-EU
0.0
0.0
0
by weighting
0 %
7.0
100.0
50
10 %
0.0
0.0
0
20 %
0.0
0.0
0
Further cover assets 3)
nominal
0.0
0.0
0
Over-collateralization
nominal
2.0
40.0
19.8
net present value
risk adjusted net present value 4)
1.7
1.3
31.1
25.4
19.8
18.9
155
1)
without “further cover assets” pursuant to § 20, par. 2 PfandBG
2)
in case of split ratings, the inferior credit rating prevails
3)
pursuant to § 20, par. 2 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization
Mortgage cover pool
Dec. 31, 2010
€ million in %
Dec. 31, 2009
€ million
Nominal volume 1)
4,704
100
5,039
by property types
residential
4,497
95.6
4,812
commercial
207
4.4
227
by number of cover loans
residential
63,830
97.1
66,908
commercial
1,938
2.9
2,113
by average loan size (actual balance) 2)
up to € 0.3 million
4,580
97.4
4,908
from more than € 0.3 million up to € 5.0 million
124
2.6
131
over € 5.0 million
0
0.0
0
by regional distribution
Germany West
3,786
80.5
4,065
Germany East
809
17.2
859
Berlin
109
2.3
115
Other countries
0
0.0
0
of which: UK
0
0.0
0
France
0
0.0
0
Spain
0
0.0
0
Benelux countries
0
0.0
0
Scandinavia
0
0.0
0
others
0
0.0
0
Further cover assets 3)
nominal
304
342
Over-collateralization
nominal
720
16.8
1,227.1
net present value
793
17.2
1,321.9
risk adjusted net present value 4)
805
16.7
1,283.0
1)
without “further cover assets” pursuant to § 19, par. 1 PfandBG
2)
pursuant to § 28, par. 2 no. 1 a) PfandBG – total amount per tranche
3)
pursuant to § 19, par. 1 PfandBG
4)
according to § 28, par. 1, S. 1 PfandBG – the lowest risk-adjusted value of over-collateralization

Commerzbank AG
Kaiserplatz
60261 Frankfurt am Main
Telephone: +49 69 1362-0
Telefax: +49 69 136-40218
e-mail: info@commerzbank.com
Internet: www.commerzbank.de
Shareholders:
Federal Republic of
Germany (25% + 1 share)
Retail Investors (ca. 5%)
Allianz (below 10%)
Institutional Investors (ca. 60%)
As of April 2011
Commerzbank is the second largest credit institution in Germany, and one of Europe’s major banks.
Commerzbank is the leading bank for private and corporate customers in Germany. Commerzbank has
a total of 15 million private and corporate customers worldwide.
Commerzbank sees its role as being that of an expert provider of services to private and business customers
and to SMEs. Commerzbank now has around 1,200 branches, giving us the densest branch network
of any German bank. Customers will benefit from an even more extensive and attractive range of products
and advisory services. With its clear commitment to the German market, Commerzbank is now an even
stronger partner for the long term, combining the expertise of two institutions under one roof.
Rating: Long-term Outlook Short-term
liabilities
liabilities
Standard & Poor’s A negative A-1
Moody‘s A2 stable P-1
FitchRatings A+ stable F1+
Selected key figures
2010
€ million
2009
€ million
Balance-sheet total
754,299
844,103
Equity as shown in balance sheet
28,658
26,576
Core capital ratio (%)
11.9
10.5
Net interest income
7,054
7,189
Provision for possible loan losses
-2,499
-4,214
156
Net commission income
Trading profit
3,647
2,052
3,722
-358
Operating expenses
8,786
9,004
Operating profit
1,353
-2,270
Consolidated surplus
1,430
-4,537
Presence in electronic media: Reuters: CBKD.DE, Bloomberg: CBK.GR
Contacts:
Investor Relations:
Jürgen Ackermann Tel.: +49 69 136-22338 juergen.ackermann@commerzbank.com
Capital Markets Funding:
Franz-Josef Kaufmann Tel.: +49 69 136-81109 franz-josef.kaufmann@commerzbank.com

IKB Deutsche Industriebank AG
Wilhelm-Bötzkes-Strasse 1
40474 Düsseldorf
Telephone: +49 (0)211 8221-0
Telefax: +49 (0)211 8221-3959
Internet: www.ikb.de
Shareholders:
LSF6 Europe Financial
Holdings L.P. (91.5 %)
Institutional and private
Shareholders (8.5 %)
As of 20 July 2009
IKB Deutsche Industriebank is a specialist bank for corporate financing in Germany and Europe.
Its target groups are small and medium-sized enterprises as well as international enterprises and
private-equity funds.
Selected key figures*
2010
€ million
2009
€ million
Total assets
31,437
35,735
Mortgage loan portfolio
2,080
3,593
Commercial loans
2,080
3,593
of which cross-border
500
593
Mortgage loan commitments
0
0
Commercial loans
0
0
of which cross-border
0
0
Public-sector loan portfolio
4,031
2,093
of which cross-border
2,491
800
Public-sector loan commitments
1,938
343
of which cross-border
1,691
160
Total funds outstanding (registered and bearer bonds)
Unsecured bonds
7,912
10,788
Refinancing funds raised
343
6,328
Unsecured bonds
0
6,000
Promissory notes
Own funds as shown in the balance sheet – total –
343
2,890
328
3,071
157
Core capital (without net income)
1,621
1,621
Profit-participation certificates
65.7
51
Subordinated liabilities
889.4
993
Net interest income
140
179
Administrative expenditure
321.3
301
Provision for possible loan losses
71
494
Operating result after provisions for risks
-190
-951
Consolidated profit
51.5
-974
* For the Group according to the IFRS, fiscal year ending 31 March.
Contacts:
Global Head of Treasury and Financial Markets:
Ralf Wittenbrink Tel.: +49 211 8221 3247 ralf.wittenbrink@ikb.de
Head of ALM and Funding:
Hauke Finger Tel.: +49 211 8221 4905 hauke.finger@ikb.de
Head of Money Markets:
Peter Schuster Tel.: +49 211 8221 4245 peter.schuster@ikb.de

Santander Consumer Bank AG
Santander-Platz 1
41061 Mönchengladbach
Telephone: 0180 5 55 64 99
Telefax: 0180 5 55 64 98
Internet: www.santander.de
Shareholder:
Banco Santander S.A.,
Madrid (100%),
indirect
For more than 50 years the Santander Consumer Bank AG has been operating in the German market
as an established provider for financial services in private customer business. The bank is the largest
non captive bank for cars, motorbikes and (motor-) caravans in Germany. Moreover the bank is also a
market leader for consumer good financing. The broad range of financial products is distributed by more
than 300 branches or via TeleCenter and Internet. Over 7 million customers trust in Santander Consumer
Bank AG, a hundred percent daughter company of Banco Santander S.A., Madrid, which is a worldwide
operating major bank.
The acquisition of the German retail business of SEB AG in January 2011 by the Santander Consumer
Bank AG provides the perspective to become a full-service retail bank. Especially the advanced branch
network and the acquired mortgage loan portfolio with a volume of almost 7 billion Euro are a solid basis
for the expansion of the business model. The Santander Consumer Bank AG is planning to apply for the
license to issue German mortgage Pfandbriefe and to issue frequently Pfandbriefe.
Rating*: Moody‘s Standard & Poor‘s Fitch Ratings
Long-term liabilities Aa2 AA AA
Outlook negative negative stable
Short-term liabilities P-1 A-1+ F1+
Financial strength B- - A/B
* Currently no stand-alone rating – therefore ratings of Banco Santander S.A., Madrid, are indicated
158
Selected key figures*
Total assets
2010
€ million
31,543
2009
€ million
26,698
Mortgage loan portfolio
8
7
Mortgage loan portfolio
8
7
Commercial loans
0
0
Total funds outstanding (registered and bearer bonds)
Unsecured bonds
41
49
Own funds as shown in the balance sheet – total –
Core capital (without net income)
1,491
1,371
Profit-sharing capital
227
233
Subordinated liabilities
207
213
Net interest income
1,005
922
Fee and commission income
312
333
Other operating result
13
19
Administrative expenditure
-493
-503
Operating result before provisions for risks
837
771
Net Provisions for risks
-369
-363
Operating result after provisions for risks
468
408
Profit after tax
433
407
* all values based on the individual account
Presence in electronic media: www.santander.de / www.santanderbank.de /
www.santander.com / www.santanderconsumer.com
Contacts:
Robert Wagner, Board Member, CFO Tel.: + 49 2161 690 - 9885 robert.wagner@santander.de
Dr. Arnd Verleger, Executive Vice President Tel.: + 49 2161 690 - 9885 arnd.verleger@santander.de
Frank Kührt, Director of Financial Markets Tel.: + 49 2161 690 - 5395 frank.kuehrt@santander.de
Ulrich Haak, Head of Treasury Tel.: + 49 2161 690 - 5397 ulrich.haak@santander.de

Other Pfandbrief Issuers 2010
As at Dec. 31, 2010 (€ million)*
Total Pfandbriefe
Gross sales Outstanding
Mortgage Pfandbriefe
Gross sales Outstanding
Public Pfandbriefe
Gross sales Outstanding
Calenberger Kreditverein
28
197
28
193
0
4
Deutsche Bank
0
1,000
0
1,000
0
0
Förde Sparkasse
40
178
40
178
0
0
Kreissparkasse Herzogtum Lauenburg
20
110
20
110
0
0
NRW.Bank
0
8,097
0
32
0
8,065
Ritterschaftliches Kreditinstitut
26
257
26
231
0
26
Sparkasse Aachen
0
140
0
0
0
140
Sparkasse Hanau
93
233
37
37
56
196
Sparkasse Hannover
99
258
1
1
98
257
Sparkasse Mönchengladbach
25
146
0
0
25
146
Sparkasse Westmünsterland
80
120
80
120
0
0
Sparkasse zu Lübeck
10
100
10
100
0
0
Stadtsparkasse Düsseldorf
137
170
20
50
117
120
Stadtsparkasse München
0
420
0
0
0
420
others**
n.s.
784
n.s.
774
n.s.
10
Total
558
12,210
262
2,826
296
9,384
*) Outstandings ≥100 mn €
**) Outstandings ≤100 mn €: Sparkasse Essen, Nord-Ostsee Sparkasse, Stadtsparkasse Wuppertal, Sparkasse Bremen,
Sparkasse Münsterland-Ost, Verbands-Sparkasse Wesel, Sparkasse Neuss, Sparkasse Holstein, Sparkasse Südholstein,
Sparkasse Krefeld, Sparkasse Pforzheim-Calw, IB Berlin, Taunussparkasse, Degussa Bank
Source: vdp
159

The Methodologies of the Rating Agencies
Fitch Ratings’ Covered Bonds (CBs) Rating Methodology | Fitch Ratings methodology mainly addresses
the probability of default (PD) of the debt but also incorporates an element of post-default recovery expectation.
Fitch Ratings defines “default” as failure to make full and timely payments of interest and/or principal
on payments due under the instruments.
The covered bonds rating methodology has been applied since 2007 and covers the following analytical steps:
— Discontinuity: Analyses the risk that payments due on the CB are not met in a timely manner as a consequence
of the insolvency of the issuer. The agency’s view about the likelihood of such an event is
expressed by the discontinuity factor (D-Factor). The Fitch Discontinuity Factor is a percentage between
0% (perfect continuity of payments) and 100% (concomitant default of the issuer and the CB).
— Cash Flow Modelling: Analyses the cash flows in combination with the sustainability of the assets provided
as collateral to investors. In doing so, Fitch also takes into account the available or committed overcollateralisation.
Assuming the issuer defaults, Fitch tests whether cash flows from the cover assets are
sufficient to meet the payments due under the CB.
— Recoveries given Default: After having determined the maximum rating a CB can reach on a probability
of default basis (PD rating), Fitch additionally takes into account expected recoveries in its simulation
runs. The rating scenarios tested go beyond the one corresponding to the PD rating level. Depending on
the expected recoveries the rating of the CB can be lifted by two (or three) notches above the PD rating,
subject to whether the PD rating is in the investment grade (‘BBB-’ and above) range or below.
160
As such, the analysis is split into two parts: On the one hand the D-Factor considers the systemic and issuer
specific elements, while on the other hand a quantitative risk analysis is conducted. The D-Factor is computed
as a weighted average score of the following four components:
— Asset Segregation 45%
— Liquidity Gaps 35%
— Alternative Management 15%
— Covered Bonds Oversight 5%
Additionally the D-Factor can be adjusted for counterparty risks dependent on the sensitivity of the investors
to these risks. The rating-dependent stress scenarios used in Fitch Ratings’ quantitative analysis assess
whether the cover pool’s payments (including overcollateralisation) are sufficient to meet the scheduled payments
to the CB holders. Important factors considered are the quality of the cover assets as well as interest,
currency and maturity mismatches between assets and liabilities.
Fitch Ratings’ covered bond methodology is consistently applied since 2007 and has been partially adjusted at
times to reflect market developments. In 2010 / 2011 the following updates were implemented:
— Counterparty Risks: In March 2011 Fitch published its covered bond specific counterparty criteria. This
criteria, inter alia, describes the analysis of payment interruption risks potentially occurring after the issuer’s
insolvency. For a full mitigation of these risks Fitch expects a reserve to cover at a minimum the amount of
expected covered bond interest payments due over the next three months on a rolling basis. Fitch will also
assess the collateralisation of derivatives taking the rating of the issuer into account and the replacement
prospects. For derivatives with internal counterparties Fitch assesses the replacement prospect more critically.
If the counterparty risks are not fully mitigated Fitch will assume a higher probability of default following an
issuer’s default expressed through an increased D-Factor.
— Analysis of commercial real estate: In January 2010 Fitch placed nine covered bond programmes with
a significant amount of commercial real estate exposure in their cover pools and limited data availability
for these assets on Rating Watch Negative (RWN). In the meantime their RWN were resolved for seven programmes.
Following the more detailed pool analysis for all of these programmes the OC supporting the ratings
has increased.
Analytical Contacts:
Rebecca Holter, Director, Covered Bonds CEE (rebecca.holter@fitchratings.com, Tel. +49 69 7680 76 261)
Susanne Matern, Senior Director, Covered Bonds CEE (susanne.matern@fitchratings.com, Tel. +49 69 7680 76 237)
Business & Relationship Development Contact:
Andreas Wagenknecht, Director, (andreas.wagenknecht@fitchratings.com, Tel. +49 69 7680 76 235)

Moody’s rating for a covered bond is determined after applying a two-step process. Firstly, based on a
largely quantitative analysis Moody’s assesses the expected loss of the covered bond with its Expected
Loss Model (EL Model) taking into account both the issuer’s credit strength and the value of the cover pool
following issuer default. Secondly, Moody’s may cap the rating arrived at using the EL Model by applying
the framework of rating caps based on the issuer’s rating and the Timely Payment Indicator (TPI) assigned
to the programme. The TPI assigned will reflect the probability of timely payments continuing on the
covered bonds following issuer default (i.e. removal of support from the issuer group).
1. Moody’s Expected Loss Model
A Moody’s covered bond rating is primarily determined by its expected loss under Moody’s EL Model.
Moody’s EL Model calculates the probability of issuer default (based on the issuer’s senior unsecured
rating), and the subsequent loss (if any) on the cover pool, on a month-by-month basis from issue to final
maturity. The results are then summed and discounted back to present value to give the overall expected
loss on the covered bond.
| Role of the issuer | If the issuer is performing, there should be no loss to covered bondholders. In addition,
while the issuer performs, it will also typically manage the cover pool – for example, by replacing
defaulted assets with performing assets if required.
| Value of the cover pool | In Moody’s analysis three key factors affect the value of the cover pool:
a) Credit quality of the cover pool | The credit quality of the cover pool is measured by its Collateral
Score. In Moody’s EL Model, the Collateral Score determines the loss due to the credit deterioration on
the assets in the cover pool that would be expected to be incurred following issuer default. The higher
the credit quality of the cover pool, the lower the Collateral Score.
b) Refinancing the cover pool | Following issuer default, the timely payment of principal under the
covered bonds may rely on funds being raised against the cover pool because the expected maturity
of the assets is generally longer than that of the covered bonds. This refinancing risk is modelled
based on three factors: (a) the expected level of discount; (b) the portion of the cover pool exposed to
refinancing risk; and (c) the average life of the refinancing risk. Typically Moody’s assumes the life of
the refinancing risk, which equates to the average remaining life of the cover pool at the time of issuer
default, as being a minimum of five years. The portion of the cover pool exposed to refinancing risk is
normally considered to be a minimum of 50%.
c) Interest rate and currency risks in the cover pool | Following issuer default, covered bondholders may
be exposed to interest rate and currency mismatches. Under Moody’s EL Model these mismatches
are sized by taking into account: (a) the size of the interest rate or currency movement; (b) the portion
of the assets with interest rate or currency mismatches; and (c) the average life of the mismatch (typically
assumed to be a minimum of five years at point of issuer default). Moody’s EL Model takes into
account whether there is hedging in place at the point of issuer default and the probability of the hedging
terminating at this time or subsequently.
161
2. Moody’s Timely Payment Indicators
A “TPI” is Moody’s assessment of the likelihood that timely payment would continue to be made to
covered bondholders following issuer default. TPIs range from “Very High” to “Very Improbable”. TPIs
operate to cap the rating of a covered bond to a certain number of notches above the issuer’s rating.
Contacts: Juan Pablo Soriano, Tel. +34 91 702-6608;
Nicholas Lindstrom, Tel. +44 20 7772-5332
Patrick Widmayer, Tel. +49 69 70730-715

The Methodologies of the Rating Agencies
Standard & Poor’s Rating Services rates covered bonds based on its criteria published in late 2009. S&P’s
criteria reflect its belief that covered bonds that exhibit mismatches between the underlying assets and the
covered bond liabilities should be linked to the issuer credit rating. Only if a covered bond can be isolated from
that risk can S&P rate the covered bonds on a de-linked basis from the issuer. When a program is exposed to
asset-liability mismatch (ALMM) risk, the maximum potential rating uplift the covered bond rating can achieve
above the issuer credit rating is seven nothes. Therefore, ‘AAA’ ratings can only be assigned to covered bonds
of highly rated issuers, provided that S&P believes the program has sufficient credit enhancement to cover all
relevant risks.
Asset analysis
The underlying cover pools typically contain residential mortgage loans, public sector bonds and loans, or
some other form of high credit-quality collateral. Thus, in case of a default a high rate of asset recovery can
be expected. However, the cover pool assets may be exposed to payment interruptions and defaults. Therefore,
using jurisdiction- and asset-specific assumptions, S&P analyses these pools to form a view on the expected
stressed credit performance. S&P currently reviews the assumptions applied in the asset analysis of public
sector covered bonds.
162
Cash-Flow and Market Value Analysis
In addition to interest and exchange rate mismatches there is an inherent maturity mismatch between the
cover pool assets and the covered bonds. Analysing the degree of this mismatch together with the potential
repayment options is an important step in S&P’s cash-flow- and market value analysis for covered bonds. If the
cover pool fails to generate sufficient cash-flows, S&P models the sale of the remaining cover pool assets by
discounting their cash flows using a stressed discount rate and an asset specific liquidity premium.
We also evaluate the alternatives at the trustee’s disposal to manage ALMM in case of an issuer default.
The broader the range of funding options and the more well-established and systemically important S&P
believes the covered bond market is the higher is the potential rating uplift the covered bond rating can
achieve above the issuer credit rating.
Lastly, S&P determines a rating on the program that reflects the cover pool’s actual level of credit enhancement.
In this step, S&P assesses whether the available credit enhancement in a program is equal to or higher
than the target credit enhancement deemed commensurate to support the maximum potential rating. The target
credit enhancement covers all risks that S&P considers relevant and in our view allows for timely payment
of all covered bond liabilities.
S&P publishes the main indicators of the covered bonds it rates in a quarterly report (see “Global Covered
Bond Characteristics and Rating Summary” on www.standardandpoors.com/coveredbonds).
Legal Risk
S&P typically reviews the following legal aspects when assigning a rating to a covered bond program – with
special regard to the case if the issuing bank fails:
— Is there a clear segregation of the assets and cash flows;
— Does no acceleration of payments to noteholders of the program occur;
— Are covered bonds excluded from the payment moratorium or forced restructuring of the bank;
— Is the provided credit enhancement fully available to covered bond holders;
— Are hedging instruments still available after the insolvency of the bank;
— What options has the trustee available to access liquidity; and
— What options are available to manage the cover pool.
Operational and Administrative Risks
In its rating process S&P also considers the relevant operational and administrative risks. Hereby, we review
the organisational aspects of the bank, as well as the credit life cycle of the respective assets. The issuer’s business
policy, origination and servicing operations, together with recovery following a default are all assessed.
Counterparty Risks
To the extent a program benefits from the use of derivatives to address any interest rate or currency mismatches
S&P reviews the underlying agreements to assess whether they conform with its relevant counterparty
criteria. The covered bond specific counterparty criteria are currently under review.
S&P methodology may change from time to time as a result of market and economic conditions
that would affect our credit judgment. S&P currently reviews its counterparty criteria for covered bonds.
(Editor‘s Note: This article is a summary of the S&P criteria published in late 2009 (“Revised Methodology And Assumptions
For Assessing Asset-Liability Mismatch Risk In Covered Bonds” published on Dec. 16, 2009 and available on RatingsDirect and
www.standardandpoors.com/coveredbonds.)
Contacts:
Primary Credit Analyst: Sabrina Miehs, Frankfurt, (49) 69-33-999-304; sabrina_miehs@standardandpoors.com
Analytical Manager - Covered Bonds: Karlo Fuchs, Frankfurt, (49) 69-33-999-156; karlo_fuchs@standardandpoors.com

Topics covered in 1996 – 2010
1996
— The Pfandbrief market, legal framework and issuers | FRANZ-JOSEF ARNDT
— The international credit investor’s view of Pfandbriefe | GEORG GRODZKI
— The Jumbo Pfandbrief market | FRIEDRICH MUNSBERG
— Liquidity on the Pfandbrief market | KARL-HEINZ PRIESTER
— Yields and spreads on the German market | DR. ALFRED BÜHLER, DR. MICHAEL HIES
— The German Pfandbrief Price Index PEX and the Pfandbrief
Performance Index PEXP | DR. ALFRED BÜHLER, DR. MICHAEL HIES
— Mortgage Pfandbriefe and mortgage-backed securities | FRIEDRICH MUNSBERG
1997
— The Pfandbrief market, legal framework and issuers | FRANZ-JOSEF ARNDT
— The Jumbo Pfandbrief market | FRIEDRICH MUNSBERG
— Rating German Pfandbriefe: Overcollateralization for a Triple A
| GAIL I. HESSOL, DR. JÜRGEN U. HAFERKORN, MICHAEL ZLOTNIK
— Indices for the Jumbo Pfandbrief market: JEX and JEXP
| JOSEF DEUTSCH, JÜRGEN HILLER
— Yields and spreads on the German market | DR. ALFRED BÜHLER, DR. MICHAEL HIES
— The German Pfandbrief Price Index PEX and the Performance Index PEXP
| DR. ALFRED BÜHLER, DR. MICHAEL HIES
— Mortgage Pfandbriefe and mortgage-backed securities | FRIEDRICH MUNSBERG
— A European standard for the Pfandbrief | DR. DIETER BELLINGER
1998
— The German Pfandbrief | FRANZ-JOSEF ARNDT
— The Jumbo Pfandbrief market | FRIEDRICH MUNSBERG
— The Jumbo Pfandbrief future | JOSEF DEUTSCH, RALF DREYER
— The Pfandbrief under European Monetary Union | GERHARD BRUCKERMANN
— A European standard for the Pfandbrief | DR. DIETER BELLINGER
— Pfandbrief rating in EMU | DR. Oliver EVERLING
— Yields and spreads on the German capital market
| DR. ALFRED BÜHLER, DR. MICHAEL HIES
— Indices for the German Pfandbrief market: PEX/PEXP and JEX/JEXP
| DR. ALFRED BÜHLER, JOSEF DEUTSCH, JÜRGEN HILLER, DR. MICHAEL HIES
163
1999
— The Pfandbrief | FRANZ-JOSEF ARNDT
— The mortgage banks in Europe | KURT BONFIG
— State supervision of the German mortgage banks | VOLKHER KERL
— Relative value aspects in the Jumbo market | DR. ERWIN MIRKES
— Pfandbrief’s prospects as a spread product benchmark under the euro
| DR. RALF GROSSMANN, HANSJÖRG PATZSCHKE
— Structured Pfandbriefe as an attractive alternative investment | MARTIN SCHULTE
— The Pfandbrief and European bond market indices | ANNETTE SCHNEEWEIS
2000
— The Pfandbrief | FRANZ-JOSEF ARNDT, JENS TOLCKMITT
— Alternative funding possibilities for mortgage banks | FRANK DAMEROW
— The Pfandbrief and related debt instruments | GEORG GRODZKI
— The world of bonds goes electronic | HORST BERTRAM
— The Jumbo repo market | MARCO HOSENSEIDL, TED PACKMOHR
— Jumbo Pfandbrief – relative value analysis | DR. UDO HERGES
— State supervision of the German mortgage banks | VOLKHER KERL
— Valuing properties for property finance purposes | REINER LUX

2001
— The Pfandbrief – latest developments and legal framework | FRANZ-JOSEF ARNDT, JENS TOLCKMITT
— The Pfandbrief and related debt instruments | GEORG GRODZKI
— Continued internationalization of Pfandbriefe and growth of Mortgage-Backed Securities
| TED LORD, DAVID WELLs
— The rating approaches for German Pfandbriefe | CHRISTOPH ANHAMM
— Electronic trading still does not satisfy all expectations | HORST BERTRAM
— A fair value model for the Pfandbrief spread | ANDREAS REES
2002
— The Pfandbrief in the European capital market | JENS TOLCKMITT, CHRISTIAN WALBURG
— The amendment of the Mortgage Bank Act: Safety of the Pfandbrief further strengthened
| DR. LOUIS HAGEN
— Business potential of Germany’s mortgage banks for public-sector lending in non-European G7
countries and Central European OECD states | NORBERT MEISNER
— The rating approaches for Pfandbriefe | CHRISTOPH ANHAMM, HEIKO LANGER
— Jumbo Pfandbrief spreads: everything new, everything different
or everything as it was? | THOMAS HERBERT, JÖRG BIRKMEYER
— Securitization in the context of mortgage banking | IAIN BARBOUR, FRANK DAMEROW, JENNIFER THYM
— New developments in the repo market – Implications for the Jumbo repo market
| EDUARD CIA, CLAUDIA SCHINDLER
164
2003
— The Pfandbrief in the European Capital Market | SASCHA KULLIG, CHRISTIAN WALBURG
— Covered Bond – The unknown Species | DR. LOUIS HAGEN
— Pfandbriefe and Other Non-sovereign High-quality Credits | RALF GROSSMANN, ALEXANDRE TRULLI
— Methodology by Fitch Ratings for Pfandbriefe Takes Into Account Optimized Mortgage Bank Act
| BRIDGET GANDY, SILKE REINIG, JENS SCHMIDT-BÜRGEL
— Moody’s Rating Methodology for German Pfandbriefe | JOHANNES WASSENBERG
— Standard & Poor’s Analytical Approach to Rating Pfandbriefe in Germany
| DANIEL KÖLSCH, MICHAEL ZLOTNIK, ALAIN CARRON
2004
— The Pfandbrief in the European Capital Market | SASCHA KULLIG
— A New Era for the Pfandbrief | DR. LOUIS HAGEN
— The Future Capital Requirements of Pfandbriefe in Europe | DR. CHRISTIAN MARBURGER
— Pfandbrief Technology Gains Further Ground in Europe – Causes, Consequences,
Implications for Investments | FRITZ ENGELHARD
— Market-making for Jumbo Pfandbriefe and other Covered Bonds
| JOHANNES RUDOLPH, ALEXANDER LEUSCHEL, GREGOR BECKMANN
— Mortgage Pfandbrief Net Present Value Regulation | DR. BOY HENRICH TIMMERMANN
2005
— The Pfandbrief Market 2004/2005 | SASCHA KULLIG, BODO WINKLER
— New Pfandbrief Act as Uniform Framework for Pfandbrief Issuance Strengthens the Pfandbrief
and Germany as a Financial Center | DR. LOUIS HAGEN
— The Issuer Landscape under the Regime of the Pfandbrief Act | RALF BURMEISTER, UWE BURKERT
— Ten Years Jumbo Pfandbrief – How it all began | FRIEDRICH MUNSBERG
— The First Six Months of the European Covered Bond Council | DR. LOUIS HAGEN
— Who Invests in Pfandbriefe? Investor Structure of the Covered Bond Market | TED PACKMOHR
— Pfandbriefe in Fixed-Income Indices: A Basis for Financial Innovations | GÖTZ KIRCHHOFF

2006
— The Pfandbrief Market 2005/2006 | BODO WINKLER
— Amended Minimum Standards strengthen Jumbo Pfandbrief | Sascha Kullig
— What you Always Wanted to Know About the Secondary Market for Jumbo Covered Bonds
| BODO WINKLER
— The new, uniform supervision of Pfandbrief banks | Michael Bläser, Dieter Ullrich
— Transparency on the Pfandbrief Market – Comments from an Investor’s Perspective
| Torsten Strohrmann
— The Ship Pfandbrief as a new asset class | Thomas Schulze, Lambert Adams
— Pfandbriefe versus MBS – Rivals, or Complementary Instruments? | Michaela Lorenz
— The European Jumbo Covered Bond Market in the Footsteps of the German Pfandbrief
| Bernd Volk, Florian Hillenbrand
2007
— The Pfandbrief market 2006/2007 | BODO WINKLER
— The financing of large real estate projects and the Pfandbrief market | Frank Lamby
— New trends in the Pfandbrief banks’ public finance operations | Dr. Christoph Hausen
— The “Local and Regional Government” Rating Project | Rainer Pfau, Guido Bach
— The vdp Pfandbrief Curve | Bodo Winkler
— The US covered bond market: A long way from infancy to maturity | Sabine Winkler
2008
— The Legal Framework for Issuing Pfandbriefe | Dr. Louis Hagen
— The Pfandbrief Market 2007/2008 | BODO WINKLER
— Amendment of the Pfandbrief Act | Dr. Otmar Stöcker
— Market Making for Jumbo Pfandbriefe: Quo vadis? | Franz-Josef Kaufmann
— Pfandbriefe in periods of financial crisis – Quality prevails
| Ernst-Albrecht Brockhaus, Horst Bertram
— The Pfandbrief and the ECBC’s “Essential Features of Covered Bonds” | Ralf Burmeister
165
2009
— The Legal Framework for Issuing Pfandbriefe | Jens Tolckmitt, Dr. Otmar Stöcker
— Amendment of the Pfandbrief Act 2009 | Dr. Otmar Stöcker
— The Pfandbrief Market 2009/2010 | BODO WINKLER
— GGBs – only an intermezzo? | Franz Rudolf, Florian Hillenbrand
— The importance of Pfandbriefe and “SoFFin bonds” (bonds guaranteed by Germany’s
Special Fund for Financial Market Stabilisation) for Aareal Bank’s refinancing
— The Aircraft Pfandbrief | Matthias Reuleaux, Tammo Reimann
— The vdp-Curve (Mortgage Pfandbrief): From Pfandbrief yield to mortgage interest
| Christian Fischer, Bodo Winkler
2010
— The Legal Framework for Issuing Pfandbriefe | Jens Tolckmitt, Dr. Otmar Stöcker
— 2010 Amendment of the Pfandbrief Act | Dr. Otmar Stöcker
— The Pfandbrief Market 2009/2010 | BODO WINKLER
— The Cover Pool Monitor of a Pfandbrief Bank – Duties – Powers – Limits | Dr. Michael Labe
— Cover-specific Structures and Processes of a Pfandbrief Bank | Ralf Dresch
— vdp Transparency Initiative | Bodo Winkler
— Pfandbriefe – do they emerge from the crisis stronger? | Sebastian Sachs
— Changes to the Regulatory Environment of Pfandbrief Banks – Beginning of a New Era?
| Roman Berninger

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Publisher:
Association of German Pfandbrief Banks,
Georgenstrasse 21
10117 Berlin
Telephone: +49 30 20915-100
Telefax: +49 30 20915-419
e-mail: info@pfandbrief.de
Internet: www.pfandbrief.org
Mailing address:
P.O. Box 64 01 36
10047 Berlin, GERMANY
Design:
Bert Klemp Corporate Design
Gernsheim am Rhein
16 th edition, Berlin 2011
© Association of German Pfandbrief Banks, Berlin
Content effective August 2011
The Pfandbrief ISSN 1615-0104
All rights reserved. Extracts from
the Fact Book may be reproduced
only if the source is named.
The present English version of the
Fact Book and the articles presented
herein were translated from the original
German version into English and
carefully reviewed. However, in case
of doubt, the original German draft
applies.
The Fact Book is also available
in German.

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