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26 Management Report – münchener Hypothekenbank eg l annual Report 2011 Turnover of residental property financing generated via inde- pendent financial service providers rose by more than one-third to € 530 million. Last year Swiss PostFinance expanded its position in the Swiss residential property financing market, which assured a stable volume of broker sales. Our commercial property financing business – including financ- ing housing companies – rose by about € 800 million, or more than 20 percent, over the previous year’s figure. More than one-third of the volume of new business posted originated out- side of Germany, with the UK accounting for the largest share. Margins also developed favourably. In addition to our classical business with housing companies, we played a far more active role in financing larger residential property portfolios in Ger- many last year than we did in previous years. Our entire volume of new business in the commercial property financing segment last year was once again fully in accordance with our conserva- tive lending policy. Public-sector and bank lending, and municipal loans Spreads widened for bonds issued by the public-sector and banks as the sovereign debt crisis widened and worsened. In this difficult environment, we were very cautious in our lend- ing business with the public-sector and banks and placed even greater emphasis on the quality of our commitments. In general, we only invested in very creditworthy addresses. The current situation has basically placed a question mark next to the public-sector and bank lending area of business. Regu- latory requirements have led to a situation wherein these loans affect the ability to carry risk, despite lower equity capital requirements, as their values have declined in the interim thereby forcing banks to raise their equity capital levels. As a result, credit institutions will be increasingly reluctant to lend to the public-sector and will withdraw from the interbank market, which in turn can place a burden on the financial system. The total volume of new loans made fell from € 1.9 billion in the previous year to € 1.4 billion in 2011 due to our observance of our strategic guidelines. Refinancing MünchenerHyp was able to obtain refinancing at favourable and appropriate conditions throughout the entire year. In comparison to banks that sought financing via the capital market, and which were not members of the Cooperative Financial Network, we paid notably lower risk premiums over longer periods of the year for our covered refinancing needs – due to our membership in the Cooperative Financial Network – as well as for uncovered refinancing. “Once again in 2011, investors valued MünchenerHyp as a reliable partner in the capital market.” Furthermore, our outstanding Jumbo Pfandbriefe remained mostly exempt from the considerable widening of spreads seen in the covered bond markets. The reason behind the sta- bility of our Pfandbriefe is our open and regular communication with investors, who are honouring our low-risk business model, as well as MünchenerHyp’s membership in the Cooperative Financial Network. In addition, our strategy of regularly issu- ing euro-denominated Jumbo Pfandbriefe has established Münchener Hypothekenbank as a reliable partner in the capi- tal market. This is reflected by the Jumbo Mortgage Pfandbrief we issued at the start of 2011, which we increased in February 2012 with two additional issues of € 125 million each for a total nominal amount of € 1.25 billion, with low premiums of 5 basis points and most recently 1 basis point over mid-swap. One of MünchenerHyp’s strengths is its flexibility in issuing private placements, which once again represented the most significant share of our refinancing efforts. Being embedded in the Cooperative Financial Network as a central partner has eased our access to uncovered refinancing resources. During the 2011 financial year we obtained total refinancing of € 6.6 billion, of which Mortgage Pfandbriefe issues repre- sented € 2.8 billion, and Public Pfandbriefe € 1.0 billion. The sale of uncovered securities for refinancing purposes amounted to € 2.8 billion. Outflows in the refinancing business totalled € 6.3 billion, resulting in net sales volume of € 0.3 billion.