Development of the Pfandbrief
 Mortgage Pfandbriefe
 Public (municipal) Pfandbriefe
 Covered bonds

Basic Information

»Mortgage Pfandbriefe

  • Legal basis
    • Mortgage Bank Act of 1899 in its current version (HypBG)

  • Asset cover / Cover pool
    • Loans secured by liens recorded in the land register
      • Ear-marking of the mortgage with “surety registry” in the land register (if the property is in Austria).
        Deeds for disposal of liens provided with this ear-marking must be (co-)endorsed by the Pfandbrief trustee (see under “Regulation”).

      • The property must be located in Austria, an EU or EEA member state or in Switzerland. If the property is located outside of Austria, it must be ensured that the rights of the Pfandbrief creditor can be enforced analogously to the legal conditions in Austria (in particular regarding the priority rights in case of bankruptcy).

      • Derivative contracts (to reduce interest rate, foreign exchange or debt risks, cf. sec 6 (5) HypBG).

  • Mortgage valuation
    • Exposure limit of 60% of the calculated collateralisation value. When establishing that value, in particular, only the persistent attributes and the persistent revenue from the property are taken into account (sec 12 HypBG). Any prior charges on the collateralisation value must first be subtracted.

  • Overcollateralization (OC)
    • Mandatory nominal OC of min. 2% which must be held in substitute cover assets.
    • In addition to disclosing the nominal cover, the articles of association of the issuerof the mortgage Pfandbrief may also provide for disclosure of net present value cover.

  • Substitute
    • collateral of 15% of outstanding Pfandbriefe (cf. sec 6 (4) HypBG):
    • Debt of any of the domestic corporations of public law, states, regional governments and local communities identified in sec 41 (1) HypBG

    • Balances held with certain central banks or at specific financial institutions

    • Cash

  • Compensation of investors
    • A mortgage bank is liable with all of its assets

    • In the event of the mortgage bank’s insolvency, the asset cover constitutes a segregated asset estate on which Pfandbrief creditors hold a first-ranking claim

  • Matching maturity
    • According to sec 9 HypBG mortgage Pfandbriefe may only be issued if their maturity does not significantly exceed the maturity of the mortgage loans.

  • Set-off rights
    • Any set-off against claims in the asset cover is statutorily barred (sec 34a HypBG).

    • The credit or loan borrower must be informed about it.

  • Monitoring & Supervision
    • Cover pool trustee (appointed by the Austrian Finance Ministry)
      • monitors compliance with cover pool regulations and confirms it prior to any new issue

      • must consent to any additions to or withdrawals from the cover pool
    • Financial Market Authority

    • Public accountants and bank auditors

  • Article 22 (4) of UCITS or Capital Requirements Directive (CRD)
    • Compliant

  • Risk weighting: 10%