Mortgage credit in Ukraine Draft proposal prepared by: Niels Tørslev and Troels Bülow-Olsen
The European development <ul><li>House prices </li></ul><ul><li>Deposits </li></ul><ul><li>Mortgage ratios </li></ul>Focus...
Covered bond - changes <ul><li>Security for access to the mortgage </li></ul><ul><li>Security for LTV </li></ul><ul><ul><l...
The competitive situation in Ukraine <ul><li>Changed competitive landscape due to foreign acquisitions </li></ul><ul><li>R...
Observations – the Ukrainian bank profile <ul><li>Young </li></ul><ul><li>Expanding </li></ul><ul><ul><li>Business sectors...
The profiles – as experienced today <ul><li>Foreign owned banks </li></ul><ul><li>Massive growth for the next two years </...
The market players…. and possible options! Foreign bank The parent company funds! Large national  bank May possibly handle...
Development in the market <ul><li>International players will take over the market in two to three years due to: </li></ul>...
Alternative models in Ukraine… <ul><li>State owned mortgage market player! </li></ul><ul><li>Jointly owned specialty bank!...
Future model in Ukraine - Start-up models Financial engine - scoring of existing portfolios Joint funding 1. Purchase of p...
Future model in Ukraine - Start-up models Our choice! Financial engine - scoring of existing portfolios Joint funding 1. P...
Value chain Borrower Bank Investor
Future model in Ukraine - Critical issues!!! <ul><li>Covered Bond legislation </li></ul><ul><li>Security of mortgage </li>...
Future model in Ukraine - Our recommendation <ul><li>Jointly owned specialty bank </li></ul><ul><ul><li>Banks have ownersh...
Future model in Ukraine  Investor Known product Secure product Funding Product Knowledge/ training Advisory services Sale ...
Future model in Ukraine <ul><li>Simple products </li></ul><ul><li>Standard funding </li></ul>Joint  funding Common product...
Future model in Ukraine - Decision process <ul><li>” Ownership” of ”selling” the model must be firmly placed! </li></ul><u...
To do…. 2006 1.2007 2.2007 2008 Establish basis Decision Finances Product development IT solution Marketing/training Imple...
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  1. 1. Mortgage credit in Ukraine Draft proposal prepared by: Niels Tørslev and Troels Bülow-Olsen
  2. 2. The European development <ul><li>House prices </li></ul><ul><li>Deposits </li></ul><ul><li>Mortgage ratios </li></ul>Focus on funding Covered bond – legislation/content
  3. 3. Covered bond - changes <ul><li>Security for access to the mortgage </li></ul><ul><li>Security for LTV </li></ul><ul><ul><li>Initially </li></ul></ul><ul><ul><li>Current </li></ul></ul><ul><li>Limitations in the financial risk in the pool! </li></ul><ul><li>Instruments to re-establish security </li></ul>
  4. 4. The competitive situation in Ukraine <ul><li>Changed competitive landscape due to foreign acquisitions </li></ul><ul><li>Rising house prices and increased home financing </li></ul><ul><li>Heated real estate market </li></ul><ul><li>Need for FUNDING for everyone! </li></ul><ul><li>Need for improved efficiency in </li></ul><ul><ul><li>the advisory process </li></ul></ul><ul><ul><li>the production process </li></ul></ul>
  5. 5. Observations – the Ukrainian bank profile <ul><li>Young </li></ul><ul><li>Expanding </li></ul><ul><ul><li>Business sectors </li></ul></ul><ul><ul><li>Segments </li></ul></ul><ul><li>Perhaps not transparent! </li></ul><ul><li>US dollar focused! </li></ul>
  6. 6. The profiles – as experienced today <ul><li>Foreign owned banks </li></ul><ul><li>Massive growth for the next two years </li></ul><ul><li>IT </li></ul><ul><li>Production/processes </li></ul><ul><li>Funding </li></ul><ul><li>National/regional </li></ul><ul><li>banks </li></ul><ul><li>Significant growth </li></ul><ul><li>Seeks help (state mortgage institute) </li></ul><ul><li>Open to strategic offers </li></ul><ul><li>Local banks </li></ul><ul><li>Cut off from the action </li></ul><ul><li>Owned “subsidiary bank” </li></ul><ul><li>Moving ahead, but without funding </li></ul>Moving to control a market that is not loyal
  7. 7. The market players…. and possible options! Foreign bank The parent company funds! Large national bank May possibly handle funding on its own! Regional bank May possibly handle funding on its own! State Mortgage! Maybe joint company! Local bank Have not seen the problems!
  8. 8. Development in the market <ul><li>International players will take over the market in two to three years due to: </li></ul><ul><ul><li>Efficient IT </li></ul></ul><ul><ul><li>Inexpensive funding via parent company </li></ul></ul><ul><ul><li>Advisory capacity </li></ul></ul><ul><ul><li>Efficient processes </li></ul></ul><ul><li>Increased dependency to the outside world! </li></ul>
  9. 9. Alternative models in Ukraine… <ul><li>State owned mortgage market player! </li></ul><ul><li>Jointly owned specialty bank! </li></ul>
  10. 10. Future model in Ukraine - Start-up models Financial engine - scoring of existing portfolios Joint funding 1. Purchase of portfolios Bank 1 Bank 2 Bank 3 Standard funding Standard production Common credit scoring Common products 2. Start from ”zero” Bank 1 Bank 2 Bank 3
  11. 11. Future model in Ukraine - Start-up models Our choice! Financial engine - scoring of existing portfolios Joint funding 1. Purchase of portfolios Bank 1 Bank 2 Bank 3 Standard funding Standard production Common credit scoring Common products 2. Start from ”zero” Bank 1 Bank 2 Bank 3
  12. 12. Value chain Borrower Bank Investor
  13. 13. Future model in Ukraine - Critical issues!!! <ul><li>Covered Bond legislation </li></ul><ul><li>Security of mortgage </li></ul><ul><li>Valuation </li></ul><ul><li>Inefficient production </li></ul><ul><li>Cautious start-up </li></ul>
  14. 14. Future model in Ukraine - Our recommendation <ul><li>Jointly owned specialty bank </li></ul><ul><ul><li>Banks have ownership – economic / mental </li></ul></ul><ul><ul><li>Competition to international banks </li></ul></ul><ul><ul><li>Banks have customer contact </li></ul></ul><ul><ul><li>Specialty bank develops competitive products </li></ul></ul><ul><ul><li>Specialty bank/banks develop IT for advisory process </li></ul></ul><ul><ul><li>Specialty bank handles ”joint funding” </li></ul></ul>
  15. 15. Future model in Ukraine Investor Known product Secure product Funding Product Knowledge/ training Advisory services Sale Mortgage company Products Efficient production Training Rating LTV Security Bank Efficient advisory services Sale/knowledge Earnings Loyalty Competitiveness Customer Safety Dreams
  16. 16. Future model in Ukraine <ul><li>Simple products </li></ul><ul><li>Standard funding </li></ul>Joint funding Common production Common credit scoring Common product Advice Sale Joint ownership <ul><li>Efficient production </li></ul><ul><li>Common IT solution </li></ul><ul><li>Uniform credit policy </li></ul><ul><li>Low LTV at start </li></ul><ul><li>Product knowledge training </li></ul><ul><li>Common IT on advisory process </li></ul><ul><li>Common branding </li></ul><ul><li>Uniform market segmentation </li></ul>
  17. 17. Future model in Ukraine - Decision process <ul><li>” Ownership” of ”selling” the model must be firmly placed! </li></ul><ul><li>Select banks that want to ”buy” the idea…. Develop the idea together with them! </li></ul><ul><li>Ensure that legislation is developed concurrently with the future model in Ukraine! </li></ul><ul><li>Crate a clear ”image of the enemy” </li></ul><ul><li>Create a sustainable business model in which </li></ul><ul><ul><li>a competitive product is created to the customer! </li></ul></ul><ul><ul><li>a business basis is created for the individual bank! </li></ul></ul>
  18. 18. To do…. 2006 1.2007 2.2007 2008 Establish basis Decision Finances Product development IT solution Marketing/training Implementation
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