» 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.