The proceeds from the bonds taken up by the market are passed on to the 24 Swiss cantonal banks in the form of loans. The cantonal banks not only hold the Pfandbriefzentrale’s entire share capital but are also the sole borrowers. 21 cantonal banks also have an unlimited state guarantee from their canton for their commitments. All the cantonal banks have a good or very good credit rating.

The loans secured by a mortgage from the member banks serving as coverage are subject to strict legal and regulatory requirements. These limit the collateralisation to a maximum of two thirds of the lending value of the real estate. All real estate serving as cover objects is located in Switzerland. Cover objects totalling 115% of the loan amount must be pledged as collateral for the loans obtained from the cantonal banks. The interest income from the mortgages pledged for the mortgage backed loans must be at least 10 % higher than the interest expense for the mortgage backed loans obtained. The legal obligation to comply with these criteria at all times ensures that collateral that is no longer sufficient can be replaced if necessary. The Board of Directors of the Pfandbriefzentrale has limited the loans drawn by member banks to 35% of their domestic mortgage receivables recognised in the balance sheet.