Mortgage-lending institutions (Pfandbriefbanken)
Among the private German credit institutions, the 2007/08 financial crisis and the subsequent national crises in the EU have mainly hit the mortgage-lending institutions. Apart from the state banks, the major part of state aid was used for this sector, and also the liquidity assistance of the Central Bank was mostly dedicated to these institutions. As a “capital market-dependent monoliner”, this institution group, once the most solid part of the German banking industry, has lost the confidence of the financial markets.
The issue of bonds will continue to be the pivotal element of the future activities of mortgage-lending institutions. In general, the demand for bonds should increase as soon as their acceptance as a liquid instrument can be improved under Basel III as well as for insurances under Solvency II.
On a single institution level, in the past two years, a strategy in terms of a “back to the roots” approach could be observed in a number of institutions: renunciation of state financing and international real estate financing and focus on domestic commercial real estate financing. Again, a new “herd instinct” can be witnessed. Yet, for the single institution it would be more reasonable to tailor the target group selection according to a combination of own strengths and identified market potentials, in order to create an individual mix of countries, customer groups and object types.
The combination of a commission-oriented target group strategy with a proactive balance sheet and risk management at readmission of a (limited) interest rate trading success could also be an attractive model for investors, which mortgage-lending institutions could use as a basis for their road show or search for partners.
As a partner for change, zeb/ knows the requirements for the mortgage-lending institutions’ business and has extensive expertise in developing and implementing current topics. We look forward to also support your company during the change process.