France’s Natixis is planning to set up a Pfandbriefbank to refinance commercial mortgage lending and has applied to German financial supervisory authority BaFin for a licence to do so. The move signals the attractiveness of German Pfandbriefe to foreign institutions.

The Pfandbrief issuer will be called Natixis Pfandbriefbank and will be 100% owned by Natixis SA, according to a press release announcing the plans yesterday (Thursday).

The French bank’s move is concrete evidence of a trend of foreign institutions looking to the Pfandbrief market that had been flagged by some market participants. German Pfandbrief spreads have largely withstood the severest of the pressures that the capital markets have faced during the crisis, while the commercial mortgage segment of securitisation markets has been among the worst hit.

The issuer will focus on commercial mortgage lending, in particular to clients in France and Germany. The cover pool-eligible business is set to be refinanced via the issuance of mortgage backed Pfandbriefe.

Natixis has an existing commercial real estate lending business, with operations in Europe and the US. It has previously been active in CMBS, although its German portfolio is understood to have been mainly financed through senior unsecured borrowings.

While French covered bond issuance has been restricted to refinancing housing loans and public sector lending, commercial mortgage backed Pfandbriefe make up a large portion of German supply. Foreign banks from the UK and elsewhere are said to be considering similar moves to Natixis, although could enter the market through an acquisition rather than the creation of a new issuer.

Designated to head the new financial institution are Henning Rasche, former president of the Association of German Pfandbrief Banks and Eurohypo board member, and Ralf Wittenbrink, who has worked at IKB, HSH Nordbank and Westhyp.

Natixis is a 72.3% subsidiary of BPCE, which has an SFH issuing obligations à l’habitat, and Compagnie de Financement Foncier also a member of the group.