Statement by the Association of German Banks on current developments at Düsseldorfer Hypothekenbank

21 April 2008 - The owners of Düsseldorfer Hypothekenbank have decided to temporarily transfer the bank to the Deposit Protection Fund run by the Association of German Banks. A new owner will be found for the bank in an orderly procedure. This will allow it to overcome the difficulties it has run into in the current tense market environment.

Thanks to the particularly strict provisions of the German Pfandbrief Act, which set a very conservative mortgage lending limit and the requirement to hold cover pools as separate assets, the bank can continue to service and redeem its Pfandbrief bonds (mortgage-backed covered bonds).

The Federal Financial Supervisory Authority (BaFin) and the Bundesbank were informed of the transaction and welcome the measures undertaken, as they help to strengthen the German Pfandbrief market. Regulatory action was not needed because the owners acted in a highly circumspect and responsible manner.