THE BAUSPARKASSEN SYSTEM

Transcription

1 THE BAUSPARKASSEN SYSTEM Hans Christian Vallant Washington D.C., 27/05/10

2 How to finance my home Equity Bausparkassen Loan Mortgage Loan (Secondary Mortgage) Bank Loan

3 Bank Loan In countries of transition mostly no long term deposits No long term loans can be granted with fixed conditions Loans have only flexible interest rates and they are very high (e.g.in CRO about 10%-12%) Very expensive alternative should only complement the financing

4 Mortgage Loan Secondary Mortgages

5 Structure of a securitization Transaction Flows of payments and Services Debtor/Borrower Servicer Rating Rating Agency Granting of credit Interest and principal payments Ongoing administration and processing Servicing fee Rating fee Originator Special Purpose Vehicle (SPV) Insurance premium Credit Enhancer Paying agency agreement Forwarding of interest and principal payments Securities Issue proceeds Banking Syndicate Trustee agreement Insurance agreement Trustee fee Trustee Trustee (paying agency) Forwarding of interest and principal payments Placement of securities Investors Issue proceeds ---- Services Payments

6 much too complicated and missing instruments in transition countries

7 Basics of the Bausparkassen System Savings phase Right to receive a mortgage loan (after qualification check)

8 Basics 2.Savings phase 4.Repayment phase 1. Contract conclusion 3.Loan disbursement

9 Basics Savings Allocation fund Loans 30,000-40,000 70,000-60,000 Customer saves and earns interest (30-40 % of contract amount) Notification of the Bausparkasse Repayment of the loan with interest rates fixed on conclusion of the contract (interest rate of the loan is fixed and set in advance)

10 Basics Saving period before you can take down a loan The existence of state premium to promote these savings A binding medium term tenor of the saving period to receive the state premium The fixing of the future product term of the loan The purpose of the loan is limited to housing Investment opportunities for disposable resources are limited to low risk financial instruments

11 Advantages of the Bausparkassen System Interest rates are fixed and not depending on capital markets rates Planning reliability Serves lower to middle income groups that normally have no access to loans Smaller loan amounts possible

12 Advantages of the Bausparkassen System Educational side effects - creating of a saving culture e.g.cro was after the war a pure consumer market without remarkable savings ratios and with bausparen a change of minds did start Building up own funds serves financial safety Reduces defaults (very low rate) e.g. Bausparkassen in CRO about 1% and Banks about 6% of the portfolio Positive effects for the state budget generates at least 2 to 3 times higher tax incomes than costs e.g. multiplicator in CRO is 2,3 (study by economic institute of Zagreb)

13 Bausparen for Sustainable Housing Benefits for individuals with low & middle income Building up equity Fixed interest rates Long term loans Small loans for renovation Locale currency Cost efficient system The promotion of savings supported by a state premium leads to equity increase and building up assets on a wide basis The long term fixed interest loans do not suffer from capital market up's and down's Long term loans up to 20 years. Transformation of short term savings to long term loans for sustainable housing Helps to maintain a healthy housing stock and supports sustainability The building society system is a closed housing finance model - independent from capital markets this promotes stability & sustainability of the housing sector specialization, slim structures dedicated to the savings and loan process results in high cost efficiency Sustainable housing

14 Bausparkassen a story of success Year 2009 Habitants (in m) Portfolio in pieces savings and credits (in m) Market penetration (%) Czech Republic (since 1993) Slovak Republic (since 1992) Hungary (since 1997) 10, ,4 1, ,1 0,8 8 Croatia (since 1998) 4,4 0,7 16 Romania (since 2004) 21,5 0,3 1 Austria 8,3 5,6 67 Germany 82,

15 Czech Republic 5 Bausparkassen handling 5 million contracts 16 bn of deposits which is more than 50% of the total market 1,4 million loans since 1993 with a volume of 10,4 bn granted Every second house or flat is financed or cofinanced by Bausparkassen Since 1993 more than units

16 Slovak Republic 3 Bausparkassen on the market and handling more than 1 million contracts Market share in housing finance of Bausparkassen of about 56%

17 Croatia 5 Bausparkassen managing 750 tsd customers Appr. 1 bn deposits and 0,5 bn total loans Only 2% market share regarding deposits and loans Since 2005 about houses and flats cofinanced by Bausparkassen Potential is not fully used because of lack of support from government and permanent delay/cutting of state support (premium) e.g.retroactively cut of premium in 2005 Permanent delay in paying out the premium of at least one year Leaded to lack of trust of customers in the system

18 Croatia Deposits and Loans (in mln) Deposits Credits

19 Costs of Subsidies Germany (Bausparkassen System) 0.18% of national budget (2007) 6.25 per capita per capita working Croatia (Bausparkassen System) - 0,15% of national budget (2009) - 7 per capita - 23 per capita working Czech Rep. (Bausparkassen System) 1.37% of national budget (2007) ~ 60 per capita ~ 137 per capita working USA (mortgage interest tax deduction only) 2.8% of national budget (2007) 170 per capita 340 per capita working

20 Implementation of the system / critical factors for success Premium to support long term savings paid by the state Reliable and on time important for customer confidence! e.g.in Cro about 100 per person and year; incl. 3,5% interest rate on savings deposits leads to 7% net yield after 5 years of saving Fixed interest rates set in advance and attractive mostly 3% on savings and about 5% on loans fixed (up to 25 years) Right to receive a loan if minimum requirements are fullfilled e.g. legal minimum incomes by local regulations Support by local Nationalbank Liquidity distributing over waiting periods if needed

21 Status quo and outlook Middle Europe follows the idea of Bausparkassen existing system in Germany, Austria, Czech Republic, Slovak Republic, Hungary, Croatia and Romania China and Kazakhstan are testing the system Russia is reconsidering to implement the system of Bausparen

22 To sum up Secondary Mortgage system did prove its weakness»» not suitable for transition markets Banking loans can only supplement the housing financing and are cost intensive for the customer Bausparkassen systems are reliable and efficent for countries in transition Supports exclusively the local market Refinancing through local deposits No international financial risks and speculations Independent from financial markets Easily to be implemented No complicated administration

23 Thank you for your attention Contact Datas: Raiffeisen Stambena Stedionica Hans Christian Vallant HR Zagreb Radnicka cesta 47/2 Croatia