DEVELOPING MORTGAGE MARKETS IN SLOVENIA

Transcription

1 DEVELOPING MORTGAGE MARKETS IN SLOVENIA Matej More Ministry of Finance

2 CONTENTS Where Slovenia Currently is? Situation and regulatory challenges Primary Mortgage Markets Latest developments Developing Secondary Mortgage Market Appropriate model for Slovenia

3 PRIMARY MORTGAGE MARKETS Mortgage as collateral is widely used in corporate finance Weak but improving role of mortgage finance in housing finance and other non-corporate lending

4 HOUSING LOANS BY COLLATERAL TOTAL OUTSANDING - END OF THE YEAR 60% 50% 58,85% 57,44% 49,75% 43,96% % 30% 20% 10% 36,25% 29,21% 18,58% 13,56% 27,50% 23,98% 21,04% 19,80% 0% mortgage loan insurance other Source: Surveys of MoF

5 MORTGAGE BANKING LOANS SHARE IN BANKING HOUSING LOANS IN THE CURRENT YEAR 60% 50% 46,85% 51,48% 40% 30% 32,99% 20% 14,37% 17,68% 21,05% 10% 0% Source: Surveys of MOF

6 CHALLENGES IN IMPROVING EFFICIENCY OF PRIMARY MARKETS Land register Mortgage legislation Land debt Protection of mortgage lender Foreclosure procedures Eviction procedures

7 BIG PROGRESS IN LAND REGISTER Informatization of Land register completed in % of paper records converted into digital records Improved integrity of Land register - appartments Substantially reduced backlogs in registration Big impact on efficiency of mortgage lending

8 SECONDARY MORTGAGE MARKET No secondary mortgage market Deposit financing of housing loans Draft Law on mortgage and communal bonds

9 REGULATORY CHALENGES IN DEVELOPING SECONDARY MORTGAGE MARKET IN SLOVENIA What the country wants and needs What do banks need What do investors need Legal and other infrastructure etc. Main issues in Slovenia MB:MBS Specialisation of the issuer

10 CHOICE OF THE INSTRUMENT (MB : MBS) Not exclusive choice Advantages of MB for Slovenia Banks capital pressure is not the main concern keep assets in balance sheet costly transfer of assets standardisation of the loans Investors development of the capital market risk attitude of investors - high credit quality governmental bond like instrument cash flow performance & liquidity Simpler legal and tax infrastructure

11 PRIVILEGED POSITION OF MORTGAGE BOND IN THE EU LAW Investment rules Insurance companies Investment funds Solvency ratios for credit institutions

12 STATUS OF THE ISSUER Universal bank Universal bank with special license Specialised mortgage bank Centralized (joint) issuing entity

13 SPECIALISATION PROTECTION FROM INSOLVENCY Non eligible business prohibited or restricted Outer protection wall protection from insolvency Better rating of the MB = lower costs of fund raising More transparent for investors Two models of specialised mortgage banks Autonomous mortgage bank (Germany( Germany, Danmark) Specialised mortgage bank as a funding vehicle (France, Finland, Ireland, )

14 SEGREGATION AND BAKRUPTCY REMOTNESS IN THE FRAMEWORK OF THE UNIVERSAL BANKING Segregation of the cover assets and cover bonds in case of insolvency of the issuer Cover pool administrator Bankruptcy remotness MB do not accelerate in the event of bankruptcy of the issuer Specialisation not necessarily advantageous Credibility of such a legislation = investors have to be convinced

15 SPECIALISATION IN A SMALL ECONOMY Small volumes of eligible assets Doubles banking infrastructure Additional costs Additional capital Additional staff Cost of transfer of assets from originator to the issuer

16 UNIVERSAL BANKING RELATIONS TO OTHER CREDITORS? Privileged position of the mortgage bond holder in the event of insolvency Creditors with pari passu clause Creditors with negative pledge clause

17 SLOVENIAN APPROACH Quality of cover assets Segregation of cover assets in the event of insolvency MB do not accelerate Issuer Flexibility because of the market size Universal bank with a special license Issuing entity

18 DEVELOPING MORTGAGE MARKETS IN SLOVENIA Matej More Ministry of Finance