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Dr. Stephan Wuttke
"We aim to have a footprint in the benchmark segment"

Interview

5 questions for Dr. Stephan Wuttke, Bausparkasse Schwäbisch Hall AG

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

Where does Bausparkasse Schwäbisch Hall come from, where does it go?

Dr. Stephan Wuttke

Dr. Stephan Wuttke

Bausparkasse Schwäbisch Hall AG

Bausparkasse Schwäbisch Hall has a long history and has already carried out over 9 million residential real estate financings since the currency reform in 1948. We benefit from our integration into the cooperative financial network and from our strong field sales force. Our business model is traditionally based on the two pillars of building society savings and mortgage lending business. Since more people want to finance immediately in view of the low interest rates, the importance of the mortgage lending business has grown in recent years. We now take more than EUR 8 billion in new business in traditional mortgage lending onto our books each year. In addition, there are loans arranged with the cooperative banks. With a total volume of just under EUR 17 billion, we are an established player in the real estate finance market.

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

What function does the Pfandbrief have for the future development of Bausparkasse Schwäbisch Hall?

Dr. Stephan Wuttke

Dr. Stephan Wuttke

Bausparkasse Schwäbisch Hall AG

Up to now, construction financing has largely been refinanced via “free” building society deposits. In view of the growing importance of the mortgage lending business, however, this source of refinancing alone will no longer be sufficient in the future. This is why we decided several years ago to rely on the Pfandbrief as a further key source of funding. The Pfandbrief combines all the characteristics we were looking for: it is crisis-resistant, it gives access to long maturities, and all this at very attractive spreads. We therefore see Mortgage Pfandbriefe as a second strategic funding source for Bausparkasse Schwäbisch Hall.

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

Why benchmark issuer - what are your plans?

Dr. Stephan Wuttke

Dr. Stephan Wuttke

Bausparkasse Schwäbisch Hall AG

We expect to have a permanently high refinancing requirement via Mortgage Pfandbrief. And the volume will be in the billion euro range – as can be seen from the dimensions of new business already mentioned above. We therefore aim to establish ourselves as a permanent issuer with one or more benchmark issues per year. All in, it was a logical step for us to start in benchmark format right away.

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

What characterizes the cover pool of Schwäbisch Hall?

Dr. Stephan Wuttke

Dr. Stephan Wuttke

Bausparkasse Schwäbisch Hall AG

Very high credit quality and thus high security for the investor. Our pool is characterized by our business model: purely residential with a large number of relatively small individual loans, i.e. high granularity. The properties in the pool are located exclusively in Germany and also spread across the entire country. We believe that this is a very good combination that is rarely found on the Pfandbrief market. Moodys has also noted this positively in its assessment and has reported the collateral score for our pool with the floor of 5.0%. Without taking the floor into account, it would be significantly lower again. Of the Pfandbrief banks with Moody’s rating, I know of only two others that have a floor of 5.0%.

Christian Walburg

Christian Walburg

Association of German Pfandbrief Banks

How do you think the debut benchmark transaction went?

Dr. Stephan Wuttke

Dr. Stephan Wuttke

Bausparkasse Schwäbisch Hall AG

We are highly satisfied with the response we received in the market. The debut transaction, the €500 million 10-year Mortgage Pfandbrief was almost four times oversubscribed in a short period of time and with guidance of midswaps +8 came to the market at +4 basis points. In the run-up to the transaction we held investor meetings and a large investor call. Due to C-19, this was unfortunately only possible via video or telephone conference. The bottom line is that the market response to the debut, which had been prepared for a long time, was very positive. We have received a lot of interest – both from Germany and from abroad.