Oliver Lüsch, BBBank: “A balanced funding mix is advantageous for the solidity and stability of a bank”

A few years ago, BBBank developed from a liability-driven institution into a very strong mortgage lender. With excellent advice and first-class processes, we are a reliable partner throughout the country for the completion of private residential and property dreams. We have invested a great deal in this business area and are regularly awarded for this – for our product range, our top conditions, our cost-benefit ratio, our customer service and our integrity. On the one hand, this expertise makes us proud, and on the other, it gives rise to new expectations – all in the spirit of higher, faster, further.

In order to continue our growth strategy in the loan business in the long term, it was therefore a logical step for us to work towards the Pfandbrief licence and reduce our reliance on deposit business developments. This is part of our commitment to excellent bank management: a refinancing profile that is extremely stable in all market phases thanks to diversification.

Such projects naturally have a certain lead time with intensive stakeholder work and many draft decisions. The same applies to the implementation phase. In our case, it took almost three years between the internal decision to establish the licence requirements and the granting of the licence by BaFin. During this time, a cross-functional project team took care of all the necessary structures, processes and systems alongside our operational activities. After we received the Pfandbrief licence in November 2021, we were able to carry out our debut issue in 2022.

When structuring the Pfandbrief business, a core value creating process for the bank – the lending process – is affected. This importance must be taken into account at the very beginning of project planning. We were aware of its strategic importance at the time and therefore decided to seek additional external technical and IT support for the project. This allowed us to build on existing experience from other Pfandbrief banks. We would do the same again if we were faced with the choice again.

At the same time, we saw this change as an opportunity and also used the project to digitalise the entire mortgage lending process and switch to efficient tableau pricing in standard business. This holistic approach has created added value for our customers and BBBank over and above the Pfandbrief licence.

We use the Pfandbrief to refinance mortgage loans within the scope of retail property financing. With a loan portfolio of around EUR 9 billion, new lending business of EUR 1-1.5 billion and excellent customer and property quality, there is clear potential for the eiligible cover assets.

In the future, refinancing the energy-efficient refurbishment and modernisation of our customers’ property portfolios via Green Pfandbriefe is also conceivable. This makes a direct contribution to the European energy efficiency targets for buildings and at the same time supports BBBank’s sustainability agenda.

We are very proud that our growing mortgage lending business is supported by our strong and loyal member community and can be refinanced entirely from our stable deposit growth. At the same time, a balanced refinancing mix is advantageous for the solidity and stability of a bank. With the capacity to issue Pfandbriefe, we are expanding our funding mix with an instrument that has been proven to guarantee continued access to liquidity and facilitate further growth, especially in more testing times.

After issuing a total of EUR 20 million in 2023, we are planning a volume of EUR 50 million for 2024. We will gradually increase our issuing volume in subsequent years depending on demand and will regularly visit the capital market as an issuer. We have set up the Investor Relations team in our Treasury department for this purpose. It is responsible for the placing and processing of these issues and looks after our institutional investors. The Investor Relations team can already build on a strong, reliable network of institutional investors.