The supervision of Pfandbrief banks

Dieter Ullrich, BaFin

The Pfandbrief Act is the legal basis for all Pfandbrief issuers. Its introduction broadened the scope of supervisory duties. The article gives an account of how the Federal Financial Supervisory Authority (BaFin) manages to safeguard a uniform supervision of all Pfandbrief issuers.

Importance of the Pfandbrief, in Particular for Germany as a Financial Center
For many decades now, the Pfandbrief has been a showcase product for Germany as a financial center. At international level, the German Pfandbrief remains the benchmark that peer products seek to emulate.

The Pfandbrief is lucrative for issuers and investors alike in that it offers an attractive rate of return compared with sovereign bonds in particular paired with a high level of safety against default. The most interesting aspect for issuers is that the Pfandbrief – not least owing to the special supervision by the Federal Financial Supervisory Authority (BaFin) – enjoys privileged status with regard to capital adequacy requirements.