Bank of Namibia invites opinions
Securitisation is a financial engineering tool that pools various illiquid assets together to transform these financial assets into a security.
The Bank of Namibia recently called on various stakeholders to make comments on the General Draft of Securities Schemes. While securitisation activities have occurred in the past, the Bank of Namibia now wants a policy in place.
The Bank of Namibia said in a motivation: “It is one of the key responsibilities of the Bank of Namibia, as a regulator of banks, to ensure that effective and proper legal frameworks are in place to conduct securitisation transactions in Namibia. In light of this, the bank has drafted, for the issuance by the minister of finance, a general notice on securitisation schemes.”
Giving a definition securitisation, the central bank said: “Securitisation is the process by which relatively standardised loans, originally made by a bank, are pooled and sold to special purpose entities that issue marketable and or tradable debt securities or debt instruments against the pooled assets, to raise funding. The primary objective of securitisation is to increase the liquidity of loans at banks and non-bank entities, diversify the sources of funding and to reduce the originating bank''s capital requirements where certain conditions are fulfilled.”
Securitisation as a legal policy tool was first mooted in the third National Development Plan. However, securitisation as a financial engineering tool has been used before by the Government Institutions Pension Fund. First Capital was in 2010 mandated to convert pension money into mortgage-based securities.
Local magazine Insight quoted fund manager First Capital as saying in October 2010: “The N$100 million will be used to acquire these new mortgage loans and these will be held in mortgage securitisation fund (MSF) under a trust deed to be lodged with the master of the high court. The MSF will issue the mortgage-backed securities to the market and all repayments from customers will be passed over to investors including the Government Institutions Pension Fund. In fact, the Government Institutions Pension Fund mortgage securitisation mandate is very important in addressing the shortage of funding for housing and property market in general.”
OGONE TLHAGE
The Bank of Namibia said in a motivation: “It is one of the key responsibilities of the Bank of Namibia, as a regulator of banks, to ensure that effective and proper legal frameworks are in place to conduct securitisation transactions in Namibia. In light of this, the bank has drafted, for the issuance by the minister of finance, a general notice on securitisation schemes.”
Giving a definition securitisation, the central bank said: “Securitisation is the process by which relatively standardised loans, originally made by a bank, are pooled and sold to special purpose entities that issue marketable and or tradable debt securities or debt instruments against the pooled assets, to raise funding. The primary objective of securitisation is to increase the liquidity of loans at banks and non-bank entities, diversify the sources of funding and to reduce the originating bank''s capital requirements where certain conditions are fulfilled.”
Securitisation as a legal policy tool was first mooted in the third National Development Plan. However, securitisation as a financial engineering tool has been used before by the Government Institutions Pension Fund. First Capital was in 2010 mandated to convert pension money into mortgage-based securities.
Local magazine Insight quoted fund manager First Capital as saying in October 2010: “The N$100 million will be used to acquire these new mortgage loans and these will be held in mortgage securitisation fund (MSF) under a trust deed to be lodged with the master of the high court. The MSF will issue the mortgage-backed securities to the market and all repayments from customers will be passed over to investors including the Government Institutions Pension Fund. In fact, the Government Institutions Pension Fund mortgage securitisation mandate is very important in addressing the shortage of funding for housing and property market in general.”
OGONE TLHAGE
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