BaFin Issues Circular 11/2026 Consolidating Trustee Appointment Requirements for German Mortgage Ban

Key Takeaways

• BaFin's Circular 11/2026 (BA), effective September 14, 2026, replaces the 2023 FAQs on trustee and deputy appointments under Sections 7 et seq.
• of the Pfandbrief Act (PfandBG).
• It sets out the eligibility criteria, the required documents and their validity periods, the fees, and the rules on remuneration and expenses.
• Mortgage banks should check their trustee renewal pipeline and internal processes against the new document and timing requirements.

Deep Dive

BaFin's Circular 11/2026 (BA), effective September 14, 2026, replaces the 2023 FAQs on trustee and deputy appointments under Sections 7 et seq. of the Pfandbrief Act (PfandBG). It sets out the eligibility criteria, the required documents and their validity periods, the fees, and the rules on remuneration and expenses. Mortgage banks should check their trustee renewal pipeline and internal processes against the new document and timing requirements.

The circular is BaFin's formal statement of supervisory expectations for trustees, who monitor cover assets for the benefit of mortgage bondholders and derivative counterparties. It replaces the FAQs of September 27, 2023 (amended August 7, 2025), so the earlier guidance should be treated as superseded. A trustee and at least one deputy must be appointed before a bank starts mortgage bond business. Only natural persons are eligible. Each must have the necessary knowledge and experience, be independent and reliable, and not have reached age 75. The appointment ends at the end of the month in which the trustee turns 75.

Substantive criteria are detailed as follows. Knowledge is presumed for auditors and certified public accountants. Other candidates must show it through their CV, covering banking, business administration, law and, where relevant, IT. Independence is presumed to be lacking if the candidate was employed by the bank within the prior three years. Business relationships with the bank, including those of relatives under Section 11(1) No. 1 StGB, are acceptable only on market terms with no performance problems. Reliability is assessed against criminal, administrative, financial, regulatory, AML and terrorist financing history, in German and foreign jurisdictions, and does not require fault.

Procedurally, the bank proposes candidates, and BaFin appoints after consultation. A first issuance requires an explicit application. Appointments are typically for five years. The package must be submitted no earlier than six and no later than three months before the appointment or renewal date. It consists of:
- the bank's proposal
- a detailed CV with month-level dates and sanctions-screening information
- a signed declaration of no criminal record
- a certificate of good conduct for submission to an authority (Section 30(5) BZRG), required from each country of residence in the last ten years
- a Central Trade Register extract
- a declaration of independence covering three years

New certificates and extracts must be no older than three months, or twelve months if already on file with BaFin. Candidates must report significant new facts immediately. Fees are EUR 396 for an initial appointment and EUR 301 for a renewal.

Remuneration is set by BaFin case by case, with a base of EUR 800 per month for trustees and EUR 600 per month for deputies, plus a variable component tied to outstanding volume and any applicable VAT. Any benefits beyond reasonable pay and necessary expenses jeopardize independence. Expense reimbursement requires proof, though a flat rate of up to EUR 100 per month is allowed. Home office costs, telecom costs, professional memberships and liability insurance are not reimbursable. All payments must be included in regular reporting through the mortgage reporting system.

Recommended actions: map all current trustee and deputy terms and age limits, and build a timeline that meets the three-to-six-month submission window. Update templates for the CV, the declarations and the independence statement. Review trustee payment and expense practices against the non-reimbursable categories, and confirm that reporting captures all payments. Establish ongoing monitoring so that changes in a trustee's reliability or independence are reported promptly. Late or incomplete submissions could leave trustee positions vacant, which creates supervisory and issuance risk. Improper benefits to trustees could undermine cover pool oversight.

Source: Federal Financial Supervisory Authority