Real Estate Crisis Hits Two German Banks | Josef Pschorn on Deutsche Pfandbriefbank and Aareal Bank
Forward Guidance
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Exploring FON Briefs and Term Deposits for Bank Refinancing
This chapter delves into the use of FON briefs as a refinancing tool for banks, focusing on Deutsche Pfandbriefbank and the safety and importance of these bonds in the European financial system. It discusses the challenges faced by German banks due to high funding costs surpassing loan earnings, implications of expensive term funding on takeovers, and strategies for credit instrument trades. The conversation also explores historical examples of bail-ins, the hierarchy of bail-ins during bank resolutions, and the significance of having sufficient preferred senior debt capital to prevent costly bank failures.
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