The battle to win debt capital markets business in Europe has shifted to the covered bond sector as investment banks build up their divisions ahead of a potential 50% increase in supply next year after a bumper 2003.

Bankers estimate that primary supply in the European jumbo covered bond market last year breached the €100bn ($127bn) mark for the first time, helped by stronger interest in the sector outside Germany, the traditional home of the covered bond, or Pfandbrief.