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

Basic Information

» Public (municipal) Pfandbriefe

  • Public Pfandbriefe are bonds covered by claims on corporations of public law. The cover assets are registered with a cover register securitising all issued public Pfandbriefe. Items in the cover stock (cover pool) may not be allocated to specific Pfandbrief issues.
  • Eligible for the public cover pool are:
    • Claims on public law organisations in Austria (e.g. the Republic of Austria, (federal provinces, local communities) or claims whose redemption has been guaranteed by such organisations.
    • Claims on national and regional governments or local territories in other member states of the European Economic Area and Switzerland (with a maximum risk weighting of 20%) or claims guaranteed by such corporations.
    • Securities issued or guaranteed by any of the institutions named above.
  • The issuers must at all times ensure an obligatory overcollateralization of at least 2% of the nominal value of the Pfandbrief issue. In addition to disclosing the nominal cover, the articles of association of the issuerof the public Pfandbrief may also provide for disclosure of net present value cover.
  • The overcollateralization must be held in publicly listed securities or in cash. As a rule, an additional (voluntary) overcollateralization occurs by means of claims.

  • The interest income of the securities in the cover pool must at least cover the payment of interest to the Pfandbrief investors
  • In case the issuer becomes insolvent, the claims in the cover pool are then segregated from other assets in the bankruptcy estate (“special assets”). The claims of Pfandbrief investors are then by priority serviced from returns and redemptions of those claims. A special administrator of the cover pool is appointed who is obliged to continue managing the claims in the cover pool.
  • Its legal foundation is the Austrian Mortgage Bank Act (HypBG) and the Pfandbrief Act (PfandbriefG). Regulations relating to the security of the Pfandbriefe are de facto identical in the two pieces of legislation.
  • Current covering of Pfandbriefe issued and in compliance with statutory regulations are monitored, in addition to general banking regulator, by the Austrian Finance Ministry or by trustees appointed by the relevant provincial governments.

Due to the close security network, Pfandbriefe (both public Pfandbriefe in EUR as well as mortgage Pfandbriefe) are eligible for investment of trust money under Austrian civil law.