250th anniversary of the Pfandbrief: Interview with José Antonio Alvaréz

José Antonio Álvarez Vice Chairman and Chief Executive Officer Santander Group

When did you personally first come across the Pfandbrief?

I came across the Pfandbrief in the early 1990´s during my early roles in the field of financial management. I have always seen Covered Bonds to be a very efficient and reliable long-term funding instrument. The Pfandbrief is clearly one of the key pillars of this well established and typically European style of balance sheet funding.

What is the importance of Pfandbrief and other covered bonds for Santander group funding activities?

Covered bonds have played a very relevant role in the long-term funding of Santander Group entities since 2002.  They have helped finance the growth of our mortgage businesses in many jurisdictions, including Spain, Portugal, UK and Germany. Grupo Santander has currently more than EUR 45 Bn. of covered bonds outstanding in the hands of fixed income investors, about a third of our outstanding long term wholesale funding.  Of course Santander has a long standing commitment with the European Covered Bond market.

How can harmonisation of covered bonds become a success story?

Covered bonds are already a success story. Harmonisation around certain key features, such as transparency, is of course beneficial to the market, as it will enhance investor´s ability to analyze portfolios and increase even further investor confidence in the product. Nevertheless, the European covered bond market has developed quite well over the years, despite the existence of diverse local covered bond frameworks. This diversity has provided investors with the opportunity to express their preferences around legal framework and credit. However, anything that enhances the attractiveness of the product even further is, of course, welcome.