History
Wartime and an uncertain future
Pfandbrief banks were not granted a major role in financing residential construction during the time of national socialism. Their share of senior lending was extremely small because the government very rarely gave permission to issue Pfandbriefe as they wished to keep the market open for government use. As a result, the bank's sphere of activities became increasingly limited, with the effects of war becoming apparent before it had even started. Money lost its value once again and numerous debtors repaid their mortgages prematurely. Construction activity was severely restricted following the outbreak of war and demand for mortgages fell dramatically.
The last months of the war in early 1945 were generally overshadowed by increasing signs of collapse and normal commercial operations faltered. The Berlin office suffered bomb damage, at which point the bank received permission to set up an alternative operation with all the powers of an autonomous executive management in Freising near Munich.
Following the end of the war, there was a long period of uncertainty for those banks based in Berlin. Consequently, the bank was affected by the freezing of accounts in the eastern sector as this was where its offices were located. Since the destruction of the building made it impossible to work there, the bank moved its head office to Berlin-Schöneberg in the western sector in October 1945.
At the end of 1945, the bank became subject to the western occupying powers' law number 52, which gave the American military authorities control over the bank's entire assets. The bank was not allowed to do any new business and could no longer avail itself of its mortgage rights in the Soviet occupied zone and East Berlin. These loans, which accounted for roughly half the bank's loan book, were henceforth practically expropriated by eastern banks.
