A survey of European Pfandbrief-like products was issued in 2005 by the Bank for International Settlements;[2] the International Monetary Fund in 2007 issued a study of the covered bond markets in Germany and Spain,[3] while the European Central Bank in 2003 issued a study of housing markets, addressing also mortgage markets and providing a two-page overview of current mortgage systems in the EU countries.
In the aftermath of the Seven Years' War (1756–1763) that had ravaged the country Prussian King Frederick the Great introduced the Pfandbrief system with a ”cabinets-order” to ease credit shortage for the nobility.
Based on his royal decree, Prussia set up so-called ”Landschaften,” compulsory public-law associations of noble landowners, within the individual provinces.
The rapidly expanding towns and cities in the area of industrialization were in need of the housing construction and commercial properties financing.
It provided a legally prescribed, uniform organizational framework for this group of credit institutions.
While most European countries have covered bond legislation, the United States and UK initially preferred non-legislative guidelines.
The 2005 Pfandbrief Act increased potential issuers to include all licensed credit institutions that meet certain requirements.
In their cover business, Pfandbrief banks grant property finance, public sector, ship and aircraft loans.
Property financings may be included in the cover pool only up to 60% of the prudently calculated mortgage lending value.
With a volume outstanding of EUR 806 billion, the Pfandbrief held a leading place in the European bond markets at year-end 2008.
[7] Total Jumbo covered bonds first-time sales amounted to EUR 161.3 billion in 2007.
In 2007, the four biggest jumbo covered bond-issuing countries were France (24.7%), Spain (22.3%), Germany (20%), and the UK (10.7%).