Mortgage credit in Ukraine Draft proposal prepared by: Niels Tørslev and Troels Bülow-Olsen
The European development
Focus on funding Covered bond – legislation/content
Covered bond - changes
Security for access to the mortgage
Security for LTV
Limitations in the financial risk in the pool!
Instruments to re-establish security
The competitive situation in Ukraine
Changed competitive landscape due to foreign acquisitions
Rising house prices and increased home financing
Heated real estate market
Need for FUNDING for everyone!
Need for improved efficiency in
the advisory process
the production process
Observations – the Ukrainian bank profile
Perhaps not transparent!
US dollar focused!
The profiles – as experienced today
Foreign owned banks
Massive growth for the next two years
Seeks help (state mortgage institute)
Open to strategic offers
Cut off from the action
Owned “subsidiary bank”
Moving ahead, but without funding
Moving to control a market that is not loyal
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!
Development in the market
International players will take over the market in two to three years due to:
Inexpensive funding via parent company
Increased dependency to the outside world!
Alternative models in Ukraine…
State owned mortgage market player!
Jointly owned specialty bank!
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
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
Value chain Borrower Bank Investor
Future model in Ukraine - Critical issues!!!
Covered Bond legislation
Security of mortgage
Future model in Ukraine - Our recommendation
Jointly owned specialty bank
Banks have ownership – economic / mental
Competition to international banks
Banks have customer contact
Specialty bank develops competitive products
Specialty bank/banks develop IT for advisory process
Specialty bank handles ”joint funding”
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
Future model in Ukraine
Joint funding Common production Common credit scoring Common product Advice Sale Joint ownership
Common IT solution
Uniform credit policy
Low LTV at start
Product knowledge training
Common IT on advisory process
Uniform market segmentation
Future model in Ukraine - Decision process
” Ownership” of ”selling” the model must be firmly placed!
Select banks that want to ”buy” the idea…. Develop the idea together with them!
Ensure that legislation is developed concurrently with the future model in Ukraine!
Crate a clear ”image of the enemy”
Create a sustainable business model in which
a competitive product is created to the customer!
a business basis is created for the individual bank!
To do…. 2006 1.2007 2.2007 2008 Establish basis Decision Finances Product development IT solution Marketing/training Implementation