250th anniversary of the Pfandbrief: Interview with Hans-Joachim Reinke
Is there a secret behind the 250 years of the Pfandbrief? What is it?
The dictionary defines a secret as something that is to remain undisclosed, something known only to insiders or something unexplained or inexplicable. This definition cannot be applied to the Pfandbrief. The secret of its success can, however, be described as follows:
Its success is based on the high level of reliability, security and clarity that it offers investors. These features have fostered trust and confidence among investors. This means that the Pfandbrief is also sustainable in the best sense of the term and stands for values that are important to Union Investment, in particular.
How can the Pfandbrief maintain its benchmark status even in light of the Covered Bond Directive?
Competition between national covered bond laws will not stop even with the new Directive in place. This means that the Pfandbrief will still need to be systematically adapted as part of a collaborative effort involving the Association, its member banks and investors.
Made in Germany – the fact that the Pfandbrief has assumed this trendsetting role in the global expansion and enhancement of the covered bond product shows that market participants will continue to keep a close eye on the other trends that will be set in Germany in the future. Green covered bonds could well be one of these trends. After all, the world's first issue came from Germany.
The German Pfandbrief has been navigating calmly through the ups and downs on the financial markets for 250 years now. What do you wish for it over the next 30 years?
The enduring low interest rate environment, which will be with us for some time, is also affecting the Pfandbrief. People who invest in Pfandbriefe are expressly looking for security and are aware of the product's risk-reducing impact. Covered bonds are an essential asset class for Union Investment. Our bank has holdings of approximately 18 billion euros. In addition, two of the most important issuing banks in Germany, Münchener Hypothekenbank or DZ Hyp, come from the cooperative sector.
I hope that the German Pfandbrief can successfully master the balancing act that it faces while maintaining its core competencies and remaining open to innovation.