The Pfandbrief 2011 | 2012

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.
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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.