Deutsche Pfandbriefbank (pbb) launched an online retail deposit-taking service yesterday (Thursday) in a bid to broaden its funding base. The move comes after debut senior unsecured benchmarks for the German bank and as rating agencies have expressed concern over its wholesale funding.

The German bank will offer term deposits ranging from six months to three years as well as variable-rate overnight deposits. The service is offered through pbbdirekt.com. Pbb said it does not envisage offering any additional services targeting retail investors.

“We are offering flexible investment opportunities to retail investors in Germany – at attractive interest rates,” said Manuela Better, CEO of Deutsche Pfandbriefbank. “The deposits will supplement the funding for our lending activities, as a specialist bank for real estate finance and public investment finance.

“The interest rates which we are offering to retail investors will be oriented upon our costs for unsecured funding.”

Pbb in September issued its first senior unsecured bond in its own name, a Eu500m September 2015 deal, and in January sold a Eu500m July 2016 senior unsecured issue. The last senior unsecured issuance from a pbb predecessor entity was in 2007.

Moody’s in December downgraded pbb from A3 to Baa2, citing concerns about the viability of the bank’s business model, its “modest” economic capitalisation and high sensitivity to losses under stress in the context of regional exposure concentrations, and aspects of its funding. The rating agency said it considers pbb’s funding base to be susceptible to market shocks in a deteriorating market environment given a reliance on wholesale funding.

“The rating agency says that it recognises pbb’s recent success in accessing the market for senior unsecured debt by issuing Eu750m three year securities in Q3 2012, which reflects a vital improvement of its funding franchise,” it said. “Moody’s also notes pbb’s ability to obtain funding beyond 2015 by issuing promissory notes that are protected by the deposit protection fund of Germany’s private sector banks.

“However, Moody’s considers access to additional sources of senior unsecured funding to be vital, also given the size of pbb’s balance sheet. These funds are susceptible to market shocks and the bank will need to prove its ability to maintain them beyond the date for the planned privatisation in 2015.”

Yesterday’s launch of pbbdirekt.com coincided with the release of pbb’s 2012 results. The bank announced it had raised long term funding of Eu6.5bn in 2012, with Pfandbriefe accounting for Eu4.2bn of this, and the remaining Eu2.3bn placed in promissory notes and bearer bonds with an average maturity of 4.5 years.

“The volume and terms of the securities placed show the confidence investors have placed in pbb as a borrower, beyond the planned date for re-privatisation,” it said. “The bank was regularly active as an issuer, with continuously narrowing spreads over the course of the year.”

Pbb announced a pre-tax profit of Eu124m and new business of Eu5.6bn for the year.

The German bank is not the first covered bond issuer to attempt to diversify its funding through a push into the retail market.

Sweden’s SBAB, parent of the Swedish Covered Bond Corporation, for example, trebled its deposit volumes in 2012. Like pbb, Moody’s had expressed concerns about the bank’s wholesale funding reliance, having downgraded SBAB in November 2011. (See here for previous coverage.)