Mortgage Pfandbriefe defy the financial crisis

Consolidation of Public Pfandbriefe continues

vdp President Bettink: Respectable result in difficult capital market environment

The Mortgage Pfandbrief held up well last year in what was an extremely difficult market environment, particularly in the second half of the year. With gross sales of €40.9 billion, Mortgage Pfandbriefe came close to matching the result achieved one year earlier (2010: €42.2 billion; -3.1%), according to information provided by the Association of German Pfandbrief Banks (vdp). After deducting redemptions, net sales amounted to €3.8 billion. This means that the volume of Mortgage Pfandbriefe outstanding rose by 1.7% against the previous year to €223.7 billion (2010: €219.9 billion). “The Mortgage Pfandbrief remains as popular as ever among investors and issuers alike, and was even able to expand its market position in a demanding capital market environment,” said Jan Bettink, President of the Association of German Pfandbrief Banks, on Thursday in Berlin.

Public Pfandbriefe continued to consolidate last year. Gross sales totaling €31 billion were 25.5% below the result one year earlier (2010: €41.6 billion). Redemptions more than outweighed the issue volume, so that the volume of Public Pfandbriefe outstanding contracted by 13.7% to €355.7 billion (2010: €412.1 billion). Referring to this development, Jens Tolckmitt, Chief Executive of the vdp, said, “The measures that the banking industry has pushed ahead with to reduce banks’ balance sheets are affecting public-sector lending in particular. The pressure is made even more intense in this business field by the uncertainty surrounding the regulatory treatment it will receive in future.” Ship Pfandbriefe were issued totaling €900 million; their volume outstanding declined by €1.2 billion or 14.9% to €6.6 billion (2010: €7.8 billion).

In total, therefore, a volume of €72.8 billion was sold on the primary market for Pfandbriefe. Compared with €87 billion in 2010, this meant a drop by 16.3%. Taking redemptions into account, the volume of Pfandbriefe outstanding in 2011 decreased by €53.8 billion or 8.4% to €586 billion (2010: €639.8 billion). “Given the substantial uncertainties that prevailed on the capital markets for much of the year, Pfandbrief sales are very respectable. Whereas the sovereign debt crisis almost brought the interbank market to a standstill, it was possible at all times to mobilize refinancing funds on favorable conditions with Pfandbriefe,” said Jan Bettink in conclusion.

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