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The new Pfandbrief transparency obligations

Sascha Asfandiar (LL.M.)

Sascha Asfandiar (LL.M.)

Association of German Pfandbrief Banks

Change is the only constant. The second thrust of the 2021 amendment to the Pfandbrief Act (PfandBG) will come into force on July 8, 2022. In addition to various other provisions, Section 28 of the PfandBG will be affected in particular. As part of the implementation of Art. 14 of the European Covered Bond Directive, the transparency requirements for Pfandbriefe will be substantially expanded. The focus is on key figures relating to outstanding amounts, overcollateralization, maturity deferral, liquidity risk, cover derivatives, and additional and defaulted cover assets. The regulations cited in the further course already refer to the status as of July 8, 2022.

Outstanding bearer Pfandbriefe

In the future, Pfandbrief banks will have to publish a list of the international securities identification numbers (ISIN) of those Pfandbriefe that have such an ISIN, broken down by Pfandbrief class (section 28 (1) no. 2 PfandBG). This therefore affects all bearer Pfandbriefe.


Although the publication of information on overcollateralization is already standard practice, these key figures were not previously part of § 28 PfandBG. This has been changed to the extent that, in the future, mandatory information on total overcollateralization must be provided, but in addition, the amounts of statutory, contractual and voluntary overcollateralization must also be stated individually in each case (section 28 (1) no. 3 PfandBG). These amounts are to be shown as nominal, cash and risk present values.
With regard to the ratio for statutory overcollateralization, the vdp committees discussed how the future two different overcollateralization obligations – the present-value securing excess cover pursuant to § 4 (1) PfandBG and the nominal-value securing excess cover pursuant to § 4 (2) PfandBG – should be presented in the transparency report. These are two overcollateralization requirements without a subset, which are to be maintained separately but published as one key figure. As the ratios are to be disclosed by nominal, net present value and risk net present value respectively, it was recommended that the net present value securing excess cover should be converted to a nominal value basis and added to the nominal value excess cover for transparency purposes and vice versa. Similarly, a higher risk present value replaces the cash value.
However, the calculation of the nominal value of the net present value securing excess cover and the net present value of the nominal securing excess cover is not easy to implement in practice, as the individual values of the legally required ratios of the securing excess cover are not identifiable but needed for the calculation. Therefore, it was also recommended to calculate the ratio of the respective nominal and net present value securing excess cover to the total cover pool value, and to multiply this ratio on the respective other side (relation calculation model).

Maturity extension

The option introduced on July 1, 2021 for the cover pool administrator to postpone the maturity of Pfandbriefe as a last resort (section 30 (2) to (2c) PfandBG) must also be taken into account on the transparency side going foward. The prerequisites for a maturity extension, the relevant powers of the cover pool administrator and the effects of a maturity extension on the maturity structure of the Pfandbriefe must be published on a quarterly basis in accordance with predefined stages (section 28 (1) no. 5 PfandBG). Since the law does not specify any requirements regarding the extension period, vdp bodies recommend that the calculation be based on a maximum extension period of 12 months. It should be noted that this is an extremely unlikely scenario which could only come into effect once a cover pool administrator has been appointed.

The static data is a reproduction of the legal situation; in this respect, uniform text blocks have been prepared as proposals.

Liquidity risk

The obligation to publish key figures on liquidity risk is new (section 28 (1) no. 6 PfandBG). These include
– the largest negative amount within the next 180 days within the meaning of section 4 (1a) sentence 3 PfandBG for Pfandbriefe (liquidity gap),
– for how many days this liquidity gap will occur, and
– the total amount of cover assets that meet the requirements of section 4 (1a) sentence 3 PfandBG (liquidity cover).
In this regard, the vdp bodies have determined that the first two ratios relate to the day on which the largest liquidity gap occurs within the next 180 days (numerical specification from 1 to 180). The third ratio can only refer to the end of the quarter, as a corresponding figure for the day on which the largest liquidity gap occurs within the next 180 days cannot be determined precisely.

Derivatives in cover

Information on the share of derivative transactions in the cover pools and, in the case of a negative total value of derivative transactions, in the liabilities to be covered, is already part of § 28 PfandBG. In future, these will be supplemented to the extent that information on the credit rating classification (step 1 to 3) must also be published (section 28 (1) no. 7 PfandBG). The ratios will be based on the nominal value, as the references in the legal text refer to nominal value regulations.

Other cover assets

In part, the regulations on the disclosure of other cover assets have also been extended (section 28 (1) nos. 8 to 12 PfandBG). In future, information must be provided in particular on receivables in connection with the 10%, 15% and 20% limits as well as receivables exceeding these limits. In addition, the total amount of the receivables that are compliant with Article 129 CRR must also be disclosed.

Defaulted cover assets

In addition to the currently already existing obligation to disclose the total amount of payments in arrears for at least 90 days as well as the total amount of these receivables, insofar as the respective arrears amount to at least 5% of the receivable, will also be supplemented. In the future, it will also be necessary to disclose the share of cover assets for which a default is deemed to have occurred in accordance with Article 178 CRR (section 28 (1) no. 15 PfandBG). The vdp bodies understand this to mean the share of cover assets (percentage) in the cover pool for which or for whose debtor a default is deemed to have occurred pursuant to Art. 178 (1) CRR.

Implementation status

As part of its committee work, the vdp’s committees have drawn up specific implementation and interpretation recommendations on the new provisions and adjusted the requirements of the vdp Transparency Initiative, including the vdp data exchange format. The systems of the individual banks and their service provider ones are currently being adapted. The transparency disclosures in accordance with the new regulations are to be published for the first time for the third quarter of 2022 (reporting date: September 30, 2022) and the year-on-year development for the new key figures for the first time in the third quarter of 2023.


It is a commonplace: after the amendment is before the next amendment. In the meantime, certain inconsistencies in the new wording of the law have emerged, which have been clarified quickly and directly with the supervisory authority. In this respect, some points have already been shortlisted for the next revision of the Pfandbrief Act.
Although the original proposals for amendments to § 28 PfandBG went beyond the mere implementation of Art. 14 of the EU Covered Bond Directive, a compromise was reached during the legislative process which is practicable for Pfandbrief banks and at the same time takes into account the increased information needs of investors.


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editor's note

Dr. Louis Hagen