No Transfer of the General Terms and Conditions Lien upon Assignment of the Loan Claim to KfW

In its judgment of 29 April 2026 (case no. 3 U 118/25), the Higher Regional Court of Stuttgart (OLG Stuttgart) held that upon assignment of a subsidised loan claim to KfW, a transfer of the house bank’s general terms and conditions (GTC) lien securing such claims regularly fails. In the event of the borrower’s insolvency, the house bank can therefore not rely on a GTC lien over the account balance with respect to the subsidised loan. For credit institutions, this decision provides reason to critically review subsidised loan documentation and security concepts.

I. The Background

In addition to securing individual claims through separate security agreements, broad-purpose security declarations in general terms and conditions are very common in banking practice. These are intended to comprehensively protect banks in their business relationship with the customer. Clauses 14 of the General Terms and Conditions for Banks (AGB-Banken) and 21 of the General Terms and Conditions for Savings Banks (AGB-Sparkassen) provide that customers grant the bank a lien over assets of any kind that come into the bank’s possession in the course of banking business, including the customer’s claims against the bank arising from existing account balances.

The lien thus serves to secure all existing and future claims of the bank against the customer arising from their business relationship.

In the case of KfW-refinanced subsidised loans, it is regularly agreed that the claims arising from the granting of the loan are assigned to KfW upon their creation. The house bank regularly remains authorised to collect until revocation by KfW. Pursuant to Section 7 of the General Conditions for Investment Loans in the contractual relationship between the house bank and the end borrower (AB-EKN), security interests that do not pass to KfW as a result of the assignment are to be held in trust for KfW; at the same time, the AB-EKN provide that the claims in question continue to be covered by the security purpose agreed between the house bank and the end borrower even after the security assignment.

II. The Decision of the OLG Stuttgart

1. Facts and Legal Background

The OLG Stuttgart’s decision concerned a KfW-refinanced subsidised loan of EUR 700,000. The debtor maintained a business account with the defendant bank, whose GTC provided for a lien with a broad security purpose clause securing all claims of the bank from the business relationship. On the day before the opening of insolvency proceedings, the account had a balance of EUR 400,232.73. After the opening of proceedings, the insolvency administrator demanded payment of the balance. The bank, however, relied on the GTC lien and only paid out the amount exceeding the lowest balance within the three-month period prior to the insolvency petition. The bank retained the remaining amount of EUR 84,133.63 as a purportedly avoidance-proof base amount.

The three-month avoidance period under Sections 130, 131 of the German Insolvency Code (InsO) thus formed the background of the bank’s defence. In the case of account balances, it must be considered that the customer’s claim against the bank ceases to exist upon debits and arises anew with subsequent credits; the same applies to a (GTC) lien attached thereto. Increases in the balance during the three-month period are therefore vulnerable to insolvency avoidance, while the lowest continuously existing balance may be considered an avoidance-proof base. However, this argument would only have helped the bank if a lien still existed that secured the loan repayment claim assigned to KfW. The OLG Stuttgart denied precisely this in the present case.

2. The Key Findings of the OLG Stuttgart

Unlike the Regional Court of Stuttgart (LG Stuttgart) as the court of first instance (judgment of 23 July 2025 – 27 O 259/24), the OLG Stuttgart left open whether the house bank’s GTC lien was originally validly created. According to the Senate, even a validly created lien no longer secures the loan repayment claim assigned to KfW.

While a lien, as an accessory security right, generally passes to the assignee upon assignment of the secured claim pursuant to Sections 401, 1273(2), 1250(1) sentence 1 of the German Civil Code (BGB), this does not apply without restriction in the case of a GTC lien with a broad security purpose declaration that covers all present and future claims of the bank arising from the business relationship and is thus creditor-related rather than claim-related. In this constellation, the lien cannot be split in proportion to the claims upon assignment of an individual claim (as also held by the prevailing view, see Wiegand, in: Staudinger, as of 31 July 2022, BGB § 1250 para. 6; Wilhelm, Sachenrecht, 7th ed. 2021, para. 1859, with a noteworthy reference to an analogy to Section 1190(4) sentences 1, 2 BGB). At the time of assignment, it is precisely uncertain whether and to what extent further claims of the bank from the continuing business relationship will arise in the future. The lien therefore remains with the bank but only secures the bank’s own claims and no longer the assigned individual claim.

Equally unhelpful, in the OLG Stuttgart’s view, is the trust arrangement provided for in the AB-EKN. Due to the strict accessory nature of the lien, the pledgee and the creditor of the secured claim must be identical. A fiduciary holding is therefore precluded, at least in the case of accessory security interests such as liens; the position may be different for abstract security interests, such as land charges (Grundschulden).

The Senate also ruled out a lien originally created in favour of KfW. The bank’s GTC only provide for a lien in favour of the bank; a separate creation in favour of KfW was not apparent. The OLG Stuttgart also rejected, in line with the established case law of the Federal Court of Justice (BGH) (see BGH, judgment of 8 July 1993 – IX ZR 222/92, BGHZ 123, 178 = NJW 1993, 2617 with further references), the assumption of a disposition in rem in favour of third parties. Unlike contractual stipulations in favour of third parties under Section 328 BGB, the law of property does not generally permit such a construction. The Senate relies in particular on the principle of numerus clausus in property law and on the fact that the creation of a lien establishes a statutory obligation with duties on the part of the pledgee.

III. Assessment from the Perspective of Lending Practice

The consequence is significant for lending practice: the repayment claim passes to KfW without the securing lien. The GTC lien remains with the house bank and no longer secures the assigned claim. This security gap is likely to be of particular practical relevance in the currently increasing restructuring cases, since all credit security is typically subjected to a thorough legal and economic review, and any deficiencies in the security structure directly affect the recovery prospects of creditors.

The decision is dogmatically convincing but stands in tension with the economic expectation of the parties involved in subsidised lending – also raised by the defendant before the OLG Stuttgart – that the lien would continue to secure the loan claim even after the assignment. The transfer, fiduciary holding, and continued inclusion of the lien provided for in the KfW’s AB-EKN underscore this expectation. However, the OLG Stuttgart reaches a different result in this regard and emphasises that the property law limitations of accessory security interests cannot be overcome.

IV. Conclusion and Practical Guidance

The OLG Stuttgart has granted leave to appeal to the BGH on account of the fundamental significance of the matter. The appeal has since been filed and is pending before the BGH under case number XI ZR 46/26. A ruling by the highest court is desirable for practice, as the question arises in a multitude of subsidised loan relationships.

Until then, affected institutions should not rely on the house bank’s GTC lien continuing to secure the claim assigned to KfW, but must instead take proactive structuring measures themselves. The decision makes clear that the widely assumed automatic transfer of the GTC lien upon assignment of loan repayment claims to development banks does not correspond to the legal position. It also shows that fiduciary holding of accessory liens for a third-party claim holder is not possible.

For banks and development institutions, the decision is not a mere dogmatic detail but a direct indication of potential security gaps in existing and future subsidised loan structures. The following is therefore recommended for banks:

• Existing subsidised loan agreements should be reviewed to determine whether assigned claims are actually individually secured or merely covered by a broad security purpose declaration in favour of the house bank.
• If the development bank is to be secured by a lien, a specific agreement involving the development bank is required. A mere security agreement between the house bank and the borrower does not create a lien in favour of the development institution.

This article was prepared in collaboration with our research assistant Christian Rühl.