| 1 |
Funding /risk transfer / both |
Funding only, no risk transfer at all. Legally, only the two central issuers (Pfandbriefbank and Pfandbriefzentrale) are allowed to issue Swiss Pfandbriefe. Pfandbriefbank and Pfandbriefzentrale refinance their member banks by granting intermediary loans secured by the member bank's cover pool; the underlying customer mortgages and borrower credit risk remain with the originating/member bank.
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| 2 |
Eligible assets |
First-class mortgage claims denominated in Swiss francs and secured on Swiss residential property, meeting the PfG, PfV and the respective Pfandbriefbank's or Pfandbriefzentrale's valuation and cover rules. Statutory cover value is capped at two-thirds of property's lending value. The mortgages remain on the member bank's balance sheet.
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| 3 |
Brief description of structure for each |
Pfandbriefbank and Pfandbriefzentrale issue CHF-denominated Swiss Pfandbriefe and grant matched loans to member banks from the proceeds. Before borrowing, the member bank provides statutory mortgage cover over an eligible pool. Pfandbriefbank and/or Pfandbriefzentrale have a legally protected lien over the cover assets, while legal title and the customer relationship remain with the member bank. The member banks are both shareholders and potential beneficiaries of the refinancing loans. Pfandbrief issuers, them-selves, do not engage in mortgage lending, but are an important source for refinancing the member bank's mortgage business.
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| 4 |
Fees / pricing structure |
The intermediary loans to member banks and corresponding Pfandbriefe have the same maturity and are issued in the same currency (CHF). Pfandbriefbank and Pfandbriefzentrale state that the interest rate on the asset side exceeds the Pfandbrief rate by a small margin to cover operational costs.
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| 5 |
Servicing |
The originating/member bank continues all borrower-facing servicing, collections, arrears management and mortgage administration. Pfandbriefbank and Pfandbriefzentrale supervise the electronic cover pool but do not service retail borrowers.
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| 6 |
Risk sharing (if appropriate) |
The member bank remains the direct obligor to its Pfandbrief issuer and retains borrower default, prepayment and servicing risk. Pfandbriefbank and Pfandbriefzentrale benefit from the statutory lien over eligible cover assets. Member banks must increase cover if it becomes insufficient and replace mortgages that cease to qualify, including non-performing or impaired loans.
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| 7 |
Other Comments |
All Swiss Cantonal Banks are member of Pfandbriefzentrale whereas Pfandbriefbank serves as Pfandbrief issuer for the others. Swiss banks with a significant mortgage book have a legal right to become member bank of Pfandbriefbank.
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