5 questions for Andreas Glaser, Santander Consumer Bank AG

As a Pfandbrief issuer, Santander Consumer Bank AG pursues several strategic goals: On the one hand, we use Pfandbrief to refinance our long-term mortgage lending business at matching maturities. On the other hand, the Pfandbrief gives us low-cost access to crisis-resilient funding sources with an “AAA” rating and efficiently diversifies our funding.

The EUR 500 million transaction is the Bank’s second outstanding benchmark Pfandbrief issue. Investors benefit from the high liquidity of these bonds. From the issuer’s point of view, the resulting better regulatory recognition in the long-term structural liquidity ratio NSFR is relevant. Another point was also decisive for us: Pfandbrief issues in benchmark format address new real-money investors who cannot be actively reached at all with a volume of less than €500m. With this issue, we have therefore further broadened our investor base and further diversified our funding. Together with subsequent Pfandbrief issues this will lead to increased awareness of Santander Consumer Bank AG in the capital market. The increased awareness will further facilitate the Bank’s future low-cost refinancing via Mortgage Pfandbriefe.

Overall, the Bank generated more than EUR 2.2 billion in demand, which far exceeded our expectations. The issue was thus more than four times oversubscribed. 91 investors (including from Germany, Scandinavia, Benelux and France) wanted to buy the bond. 51 percent of the bond was widely distributed outside Germany.

Another indication of the success of the transaction is the fact that we were able to tighten a total of 6 basis points to mid-swaps +7 bps from the initial spread guidance without losing any significant demand volume when the books were closed on February 5. The coupon is 0.05% p.a. This is the lowest mortgage refinancing rate in the entire Santander Group.

The Pfandbrief cover pool rated “AAA” by Fitch and Moody’s amounts to 1.107 billion euros (as at the end of January 2020) and consists exclusively of private German real estate loans, which are widely spread throughout Germany. The high granularity is also evidenced by the following figures: At the end of 2019, the cover pool was spread over 17,745 real estate loans with an average loan amount of 58,034 euros.

We want to establish ourselves as a regular issuer in the market and further expand our Pfandbrief curve. Our positioning as a successful and reliable Pfandbrief issuer is the result of a combination of a solid business model, conservative underwriting standards, a sound understanding of the capital markets and a high-quality cover pool. Santander Consumer Bank AG will regularly issue Pfandbriefe also in benchmark format.