The Association of German Pfandbrief Banks (vdp) is pursuing an amendment of the Pfandbrief Act to expand the information issuers need to disclose under Article 28 in response to a transparency initiative of the ICMA Covered Bond Investor Council.

The association has decided to ask for Article 28 of the country’s Pfandbrief legislation to be amended to require the disclosure of information about interest rate and currency risk, and the vdp said that the weighted average seasoning of real estate loans in cover pools and the share of cover assets eligible for repo with the European Central Bank (ECB) should also be disclosed thereunder.

Historical Pfandbrief certificate

Article 28 of the Pfandbrief Act governs transparency requirements for Pfandbriefe, setting out the information that issuers are obliged to publish on a quarterly basis. Under a transparency initiative launched in 2010 the vdp publishes Article 28 transparency reports on its website in a standard format based on a uniform interpretation of the legal requirements.

“The vdp highly appreciates CBIC’s initiative to enhance transparency in the Covered Bond market as transparency is of high importance for German Pfandbrief Banks,” said the vdp in a letter to the CBIC. “[O]ur members have discussed your proposals in several committees very intensely and identified several useful information that you request, which go beyond the legally binding transparency requirements and which should be of interest for a wide range of investor groups.”

The extension of the transparency requirements, as mentioned above, should mean that all relevant information requested by the CBIC is addressed by Article 28, said the vdp.

“On top of that, the maturity structure of Pfandbriefe and cover assets should be disclosed in more detail,” it said.

The vdp expects the Pfandbrief Act to be amended in 2012, with subsequent changes coming into force in the autumn.

Nathalie Aubry-Stacey, secretary of the CBIC and director, regulatory policy and market practice at the International Capital Market Association, told The Covered Bond Report that the CBIC is pleased with the vdp’s move.

“This is a very positive step for us because it is a very concrete result,” she said. “We look forward to more discussions with the vdp and other issuers and issuer organisations.”

The CBIC has been aiming to have its transparency standards finalised by the end of this year, but Aubry-Stacey said that it will not be ready to disclose a final data template by then as some face-to-face meetings with issuers still need to be held. However, it plans to publish its responses to the feedback it received as part of the consultation by the end of the year.