Deutsche Postbank AG and KfW are on the verge of concluding a transaction in the framework of KfW’s PROVIDE securitisation platform. This is the first time for Deutsche Postbank AG to securitise balance sheet assets. The transaction covers approximately 20,000 private residential mortgage loans in the total amount of more than EUR 2 billion and thus represents the fourth largest of the 17 transactions concluded under the PROVIDE platform so far since October 2001. Deutsche Bank AG acts as the arranger of the deal.

With this securitisation Postbank will remove the credit risk of the loans from its balance sheet and reduce its risk assets. The synthetic transfer and the placement of the portfolio in the capital market is carried out by KfW. The corresponding credit-linked notes (CLNs) rated by three rating agencies (Fitch, Moody’s and Standard&Poors) and to be traded on the Luxembourg Stock Exchange will be issued by the special-purpose vehicle „Provide Domicile 2003-1“, which was set up for this specific purpose. The prices of the individual tranches, which will pay interest at a floating rate and, depending on their rating, have a premium above the 3-months EURIBOR, were fixed today:

Tranche	Volume (in EUR)	Rating (Moody's/S&P/Fitch)	Coupon
A	80,900,000.00	Aaa/AAA	3-M-EURIBOR + 34 bp
B	16,800,000.00	Aa2/AA	3-M-EURIBOR + 55 bp
C	13,000,000.00	A2/A	3-M-EURIBOR + 75 bp
D	10,700,000.00	Baa2/BBB	3-M-EURIBOR + 145 bp

This means that the transaction has achieved the best prices under the PROVIDE platform in 2003 so far.

The high quality of the portfolio of Deutsche Postbank AG is confirmed by the high share of AAA/Aaa-rated tranches, which account for 97.2%. The average loan-to-value ratio is very low at 65% and the share of subordinated loans in the total portfolio is only 18%. In addition, the portfolio is highly diversified since the 20 largest loans account for only 0.7% of the total portfolio.

The Postbank will use the equity capital freed up through the Provide Domicile 2003-1 transaction to extend new private mortgage loans, to expand its overall business opportunities and to increase the return on capital employed. The Postbank hands out residential mortgage loans, among others, directly on the internet under the brand name DSL, via its branch network and via partners. The Postbank intends to continue the securitisation of assets in the future.

With its PROVIDE and PROMISE platforms for the securitisation of residential mortgage loans and SME loans, respectively, KfW gives all credit institutions the opportunity to securitise credit risks under a highly standardized scheme. The equity relief thus achieved creates greater scope to grant new loans. Additionally, KfW makes an important contribution to the development of trading in risks resulting from SME and residential mortgage loans.