Client stories

DKB issues Social Mortgage Covered Bond from Germany

“DKB: Das kann Bank”

With total assets of more than €134.9 billion, Berlin-based DKB is one of Germany’s largest banks. Set up in 1990 and fully owned by BayernLB, the bank has a clear focus on ecological and social sustainability. DKB is serving retail clients solely online, being the second largest online bank in Germany with more than 5 million retail customers.

DKB, a regular issuer of Euro benchmark bonds, has been issuing green bonds since 2016 and social bonds since 2018.  While the proceeds of its green bonds go towards refinancing loans in renewable energies, the social bond proceeds are funding the refinancing of loans to institutions in the areas of social housing, public care, health and care, education and research as well as inclusion.

Strong momentum for Social Pfandbrief from the start

Looking to issue the first-ever benchmark social mortgage-backed covered bond (“Pfandbrief”) from Germany, Deutsche Kreditbank AG turned to NatWest to support the debut, in the role of Joint Lead Manager.

After announcing the €500 million 10-year “Berlin Social Housing” mortgage Pfandbrief, the deal team offered investors two Global Investor Calls as well as one-to-one meetings to present the characteristic of the issuance in more detail and to highlight the challenges of the Berlin housing market.

The investor dialogue paid off: strong momentum built right after order books opened, with demand peaking over €2.5 billion in a very short time, allowing DKB to price the notes at MS+3 basis points. 

The majority of the allocation went to German accounts (63%), while investors from the Nordics took 12% and Eastern European investors took 7%. Bank Treasuries represented the largest investor group (45%), followed by Central Banks / Official Institutions with 29% and Asset Managers with 20%. A notable 83% went to investors that account for ESG factors in their investment decisions.

The proceeds of DKB’s social covered bond will be used for lending to Berlin’s municipal housing companies, which run 330,000 state-owned flats in the state.

Championing communities and help them thrive

Uwe Jurkschat, Head of Funding and Investor Relations, DKB, said: “DKB is one of the biggest lenders to municipal housing companies in Germany, and refinancing loans for Berlin’s municipal housing plays a crucial part. We are delighted about the exceptional orderbook for our Berlin Social Housing Pfandbrief, underlining the continued support we receive from investors, in particular ESG-focused investors.”

Dominic Riethmueller, FI DCM, NatWest, commented: “Financial institutions play a crucial role in the transition to sustainable economies by providing sustainable finance to tackle the climate challenge as well as social inequalities. DKB’s Social Mortgage Pfandbrief supports UN SDGs 1 and 11, and we are very pleased for our customer about the strong result.”

Caroline Haas, Head of Climate and ESG Capital Markets, NatWest, added: “We are thrilled for DKB to have achieved such a fantastic result, broadening the sustainable finance market with the first-ever benchmark social mortgage-backed covered bond to have been issued from Germany. DKB’s commitment to sustainability mirrors our own ambition to be a sustainable, purpose-led bank that champions the communities we serve and helps them to thrive.”


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