Supervision of mortgage bond business
Mortgage bonds are securities similar to debentures for the long-term financing of first mortgage credits granted by banks. In contrast to normal debentures, the mortgage bond offers particularly extensive, legally regulated security. On the one hand, the mortgage bond issuer and the banks which draw down the loans are liable to the extent of their equity and, on the other, the mortgage creditors of the banks with their collateralised properties. Only two institutions are empowered to issue Swiss mortgage bonds viz.: the Central Mortgage Bond Issuing Body of the Swiss Cantonal Banks ("Pfandbriefzentrale der schweizerischen Kantonalbanken") and the Mortgage Bond Bank of Swiss Mortgage Institutions ("Pfandbriefbank schweizerischer Hypothekarinstitute"). The proceeds from the mortgage bond issues of both central bodies are passed on to the member banks involved to refinance the mortgage business.
The SFBC examines, in both of the central mortgage bond organisations, whether the annual financial statements comply with the provisions of the Law, by-laws and business rules and whether the Mortgage Bond Act has been complied with. The orderly maintenance of the mortgage registers in banks as well as the on-going value of the collateralised properties are, on the other hand, verified by the Banking-Act auditors.
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