Mortgage lending is carried out by Nykredit Realkredit and Totalkredit, which are both specialised mortgage banks. According to Danish legislation, mortgage banks are prohibited from taking deposits, issuing guarantees or performing financial services other than mortgage lending and are only permitted to fund their mortgage lending by issuing covered bonds. Consequently, covered bonds make up the vast majority of the Nykredit Group's funding.
Since 2006, all covered bond issuance for the Group has been carried out through Nykredit Realkredit via a joint funding model with Totalkredit. Totalkredit still has outstanding covered bonds, but has not issued new covered bonds since 2006. Read more about the joint funding model here.