Traditional Pfandbriefe are governed by the same safety requirements as Jumbo Pfandbriefe. Both Pfandbrief types are subject to the stringent provisions of the Pfandbrief Act. 

Traditional Pfandbriefe differ in terms of structuring:

• Issue size
  Whereas Jumbo Pfandbriefe must have an issue size of at least EUR 1 billion, smaller-sized Pfandbriefe are referred to as traditional Pfandbriefe.

• Registered Pfandbriefe
  Traditional Pfandbriefe can be issued in the form both of bearer Pfandbriefe and of registered Pfandbriefe. This possibility is not given with Jumbo Pfandbriefe.

  Structure
  The Minimum Standards ensure that Jumbo Pfandbriefe remain a heavily standardized and, with that, a highly liquid product. The structuring of traditional Pfandbriefe, on the other hand, is usually very much geared to the interests of certain investors.

  Structured Pfandbriefe

  Pfandbrief banks are making use of structures in order to offer institutional investors in particular tailored Pfandbriefe. The specific structuring of an issue reflects above all the investors’ desired risk/return profile and interest income expectations.

  Structured Pfandbriefe allow the German Pfandbrief banks to combine for investors the advantages of derivatives with the internationally outstanding asset quality of the Pfandbrief on attractive terms. The structured Pfandbrief category comprises issues which, unlike plain vanilla products, always contain a derivative component. For example, a callable stepped interest bond gives the investor, in return for the issuer's call option, a premium in the form of a coupon that is clearly above the market interest rate.

  
  Other structured products include:
  
  • bonds with a debtor conversion option; in this case, the issuer normally has the right to convert the instrument's coupon from fixed to variable interest rates on one or several dates.
  • bonds with caps, floors or collars.
  • generally speaking, a wide variety of complex types can be offered which make it possible to "package" within one Pfandbrief almost all conceivable expectations on currency and interest rate movements.
  
  The steady demand for structured Pfandbriefe has directly to do with the outstanding asset quality of the Pfandbrief. Investors who consciously enter into, say, an interest rate position via a structured product avoid contracting high credit risks thanks to the strong protection that the Pfandbrief Act affords creditors.