Presentation for: Workshop on Housing Finance in South Asia Wolrd Bank & International Finance Corporation Jakarta, Indonesia May, 27-29, 2009

Transcription

1 PT. SARANA MULTIGRIYA FINANSIAL (Persero) SMF ROLE IN THE HOUSING FINANCE INDUSTRY Presentation for: Workshop on Housing Finance in South Asia Wolrd Bank & International Finance Corporation Jakarta, Indonesia May, 27-29,

2 AGENDA INTRODUCTION TO SMF MORTGAGE MARKET IN INDONESIA PRODUCT & SERVICES CLOSING 2

3 INTRODUCTION TO SMF LEGAL FOUNDATION & CAPITAL STRUCTURE VISION AND MISSION 3

4 INTRODUCTION TO SMF LEGAL FOUNDATION & CAPITAL STRUCTURE LEGAL FOUNDATION Government Regulation No. 5 Year 2005 Presidential Decree No. 19 Year 2005 Article of Association No. 59 Dated 22 July 2005 Presidential Decree No. 1 Year 2008 CAPITAL STRUCTURE Authorized Capital: Rp 4 trillion (approx. USD 400 million) Paid-up Capital : Rp 1 trillion (approx. USD 100 million) Shareholder : 100% Government of Republic of Indonesia 4

5 INTRODUCTION TO SMF VISION & MISSION VISION To become an independent and trust-worthy company with the ultimate goal of making every family own their home. MISSION To promote and develop secondary mortgage market. To develop the availability of sustainable long/ medium- term funds for housing sector. To increase affordability of every family in Indonesia for home ownership (social mission). 5

6 MORTGAGE MARKET IN INDONESIA TOTAL MORTGAGE AS OF FEBRUARY 2009 MORTGAGE RATE MOVEMENT CHARACTERISTICS OF MORTGAGE LOANS 6

7 MORTGAGE MARKET IN INDONESIA TOTAL MORTGAGE AS OF FEBRUARY % 0% 1% State-Owned Bank Commercial Banks 48% Regional Development Bank 49% Joint-Venture Bank Foreign Bank Total Outstanding Mortgage Portfolio in 2008 was Rp.101 Trillion or USD 10 Billion Mortgage portfolio to GDP in 2008 equal to 2.04% Source: The Indonesian Banking Statistics (SPI), February

8 MORTGAGE MARKET IN INDONESIA TOTAL MORTGAGE AS OF FEBRUARY 2009 Cont d Total mortgage lenders : 70 out of 125 Banks More than 90% of mortgages are originated by 10 banks as major players In December 2007, new regulation allow Multifinance Cos to issue mortgages. Source: Various Sources 8

9 MORTGAGE MARKET IN INDONESIA MORTGAGE RATE MOVEMENT 19.00% 17.00% 15.00% 13.00% 11.00% 9.00% 7.00% Source: BI, Banks and Capital Market Mortgage Rate BI Rate Gov't Bonds 5 Yr Gov't Bonds 10 Yr 9

10 MORTGAGE MARKET IN INDONESIA CHARACTERISTICS OF MORTGAGE LOANS Non Subsidized Mortgage Loans originated by banks Adjustable Rate Mortgages Fully amortized Term 10 to 15 years Average life 7 to 8 years Default rate less than 4 % Average Original LTV 70 to 80 % Minimum loan amount of Rp 100 million except for BTN Subsidized Mortgage Loans program by Ministry of Housing 10

11 PRODUCT AND SERVICES TYPE OF MORTGAGE LENDERS SECURITIZATION PROGRAM REFINANCING PROGRAM SUPPORTING PROGRAM TRAINING AND WORKSHOP PROGRAM MORTGAGE STANDARD GUIDELINE 11

12 PRODUCT & SERVICES TYPES OF MORTGAGE LENDERS EXISTING BANKS NEW PLAYERS CAPITAL OPTIMIZATION RISK MINIMIZING PORTFOLIO GROWTH QUALITY OF PROCESS MARKET PENETRATION FUNDING NEEDS SECURITIZATION PROGRAM PORTFOLIO ASSESSMENT REFINANCING PROGRAM SUPPORTING ACTIVITIES TRAINING PROGRAM & MORTGAGE STANDARD GUIDELINES 12

13 PRODUCT & SERVICES SECURITIZATION PROGRAM FINDING THE APPLICABLE RMBS STRUCTURE ASPECTS STRUCTURE OPTION SPV Structuret Wali liamanat Structure t CIC-ABS Structuret Nature of the structure Typical international RMBS structure Somewhat similar to the Trust structure Use of the concept of mutual funds Kind of securities Bonds/Notes Participation Certificates Notes International recognition Widely used, e.g. Cagamas, HKMC, KFM, etc. No precedence Used in French securitization structure Legal hurdles Not recognized by capital No SPV Law market regulation Bankruptcy Risk Bankruptcy Risk Tax Hurdles No tax regulation No tax regulation Rating precedence No No Established regulation by Bapepam-LK 1) Need clarification /private ruling from Tax Authority on Withholding tax Has been endorsed by Pefindo 2) before Difficulty in Execution 3) High Medium Low 1) Indonesia Capital Market and Financial Institution Supervisory Agency 2) Indonesia Rating Agency 3) In relative comparison among the three options 13

14 THE PRODUCT FIRST RMBS & SERVICES IN INDONESIA SECURITIZATION PROGRAM Cont d CIC-ABS MECHANISM INVESTORS Proceeds 3b 3a Participation Unit Collective Investment Contract Asset Backed Securities MBS NOTES MORTGAGE RECEIVABLES 2c CREDIT ENHANCER Underlying Assets 2b 1 On going Cash flow Depository INVESTMENT MANAGER CUSTODIAN BANK Sale of Assets 2a ORIGINATOR & SERVICER Proceeds 3c 14

15 THE PRODUCT FIRST RMBS & SERVICES IN INDONESIA SECURITIZATION PROGRAM Cont d CLASS A OF RMBS DSMF01 Aaa.id rated by Moody s Rp. 100 billion Issuance Coupon: 13% p.a., Quarterly Payment Principal: amortized quarterly Expected Average Life of 2.57 years* Closing Date: 11 February 2009 Listed at Indonesia Stock Exchange *Actual performance might differ as this is calculated based on the historical rate of payment and no default. 15

16 THE PRODUCT FIRST RMBS & SERVICES IN INDONESIA SECURITIZATION PROGRAM Cont d CHARACTERISTIC OF UNDERLYING MORTGAGES Owner occupied Fire & Credit Life insurance Full documentation No delinquent exceeding 30 days since due date Average Current Loan To Value may not exceed 70% Appraised by Independent valuator 16

17 THE PRODUCT FIRST RMBS & SERVICES IN INDONESIA SECURITIZATION PROGRAM Cont d REGULATIONS SUPPORT FROM GOVERNMENT AGENCIES Bapepam-LK (Indonesia Capital Market & Financial i Institution Supervisory Agency) regulation for CIC-ABS Clarification on Tax treatment for CIC-ABS. Bapepam-LK revised its CIC-ABS regulation to accommodate the true sale fulfillment issue regarding max 10% RMBS issued (subordination portion) may be bought back by Originator. Refinement on investment regulation of pension fund about its eligible investment product coverage to cover the new RMBS product. Refinement on Indonesia Stock Exchange and Indonesia Central Securities Depository regulation to cover listing process of RMBS product. 17

18 THE PRODUCT FIRST RMBS & SERVICES IN INDONESIA SECURITIZATION PROGRAM Cont d SMF MAJOR ROLE As Global Coordinator Transaction process: Arrange and coordinate the process Facilitate and approach to Government Post transaction: Monitor RMBS performance Monitor the performances of related parties Assist in achieving prompt and fair resolution for any problems Credit Enhancer by providing fund for Reserve Account. Stand-by Buyer Market Socialization ation 18

19 THE PRODUCT FIRST RMBS & SERVICES IN INDONESIA SECURITIZATION PROGRAM Cont d CONTINUING EFFORTS FOR IMPROVEMENT A. Regulations & Procedures Investment regulation of insurance company to allow RMBS as its eligible investment product. Accounting guideline in treating RMBS investment and clarification of true sale with the implementation of International Accounting Standard/ IAS 32 & 39 on B. Data Availability Need a comprehensive housing information database system C. Marketing Process Increase investors understanding of RMBS Broaden investors base by providing regulation that allow RMBS as eligible investment products. Continues socialization for all stakeholders 19

20 PRODUCT & SERVICES REFINANCING PROGRAM Considering Indonesian mortgage market condition and based on new Presidential Regulation 1/2008, Refinancing Program is prepared mainly to : Encourage new player to enter mortgage lending business. Increase the adoption of mortgage standard guidelines. Implementing above activities and supported by training program, SMF promotes efficiency in the primary market that gradually prepared the mortgage market for future securitization. This refinancing program will be funded by issuance of debt securities to capital market. 20

21 PRODUCT & SERVICES REFINANCING PROGRAM Cont d Since its inception on March 2008, this program has assisted several multifinance companies, provincial development bank 1 and sharia banks (in process) to enter the mortgage lending business and has refinanced up to 25,275 mortgage loans. These new mortgage g lenders have adopted mortgage g standardization documents. 1) Provincial i Development Bank = Bank Pembangunan Daerah 21

22 PRODUCT & SERVICES SUPPORTING PROGRAM TRAINING & WORKSHOP PROGRAM Participants Participants The training program is developed and held incorporation with Housing Development Finance Corporation of India (HDFC) Through this program, skills and knowledge of mortgage professionals will be sharpen and always be up-to-date with changes in mortgage sector. Thus far, 17 banks, 44 Multifinance companies and 3 securities companies with up to 400 participants attending the training and workshop program. 22

23 PRODUCT & SERVICES SUPPORTING PROGRAM MORTGAGE STANDARD GUIDELINES Provides general guidelines on origination, underwriting process, servicing, management information system of mortgage business. Develops by adopting principle Basel Accord II and current mortgage practices Implementation facilitated by Bank Indonesia. Currently adopts in gradually by mortgage lenders (Provincial Development Bank, Multifinance Cos) Part of Joint Three Ministerial Decree Program to improve the adoption of mortgage standardization guidelines by banks and other types of mortgage lenders. Note: The first standard document was developed with technical assistance from Asian Development Bank. 23

24 CLOSING 24

25 PT SARANA MULTIGRIYA FINANSIAL (PERSERO) IMPROVING THE FUNDAMENTALS To continue promoting efficiency in the primary market thus creating competition (increase new players, increase skills and knowledge, increase the use of mortgage standardization documents) To develop risk migration instruments for primary and secondary mortgage market in the form of Guarantee programs To develop healthy and sound mortgage securitization practices & broaden the investor base for RMBS 25

26 THANK YOU PT. SARANA MULTIGRIYA FINANSIAL (PERSERO) Plaza Bapindo, Mandiri Tower, Lantai 10 Jl. Jend. Sudirman Kav , Jakarta Telp: (021) , Fax: (021) f i i id 26