The German Pfandbrief Act has the broadest scope and it is the strictest in many areas. For example, there are no derivatives in the underlying and the loan-to-value rules are the most conservative. Its simplicity and transparency make the Pfandbrief the benchmark for European covered bonds.
The cover pool of a Pfandbrief is of extraordinary quality, since structured products are excluded and cover assets are separated in the so-called “cover pool register”. The cover assets contained in this pool serve first to satisfy the Pfandbrief creditors, and in the event of a Pfandbrief bank’s insolvency do not participate in the insolvency proceedings.