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Moscow, November 22, 2004
—The IFC Technical Working Group on Securitization outlined legal and tax obstacles to developing a securitization market in Russia, and recommendations for removing those obstacles, at a workshop in Moscow. The workshop was organized and hosted by the State Duma (lower chamber of the Russian Parliament) representative Anatoly Aksakov, Deputy Chairman of the State Duma Credit Institutions and Financial Markets Committee. It was held for members of the Russian Bankers’ Association.
Approximately 40 bankers attended the meeting. Vladimir Gusakov, Deputy Head of the Federal Service for Financial Markets (FSFM), Russia’s key financial sector regulator, also attended. FSFM will draft the proposed enabling legislation for Russian securitization. It has drawn on the Working Group’s recommendations in determining what legislative changes are needed and plans to consult with the Working Group during the drafting process.
The workshop was one of several meetings held to date between the government and Working Group since the Group prepared its Position Paper on securitization in the Spring of 2004.
The need for securitization is growing in Russia, particularly for mortgage and consumer loans. Both are projected to grow rapidly in the coming years. “The ability to securitize these loans will help Russian banks meet rising credit demand, and maintain affordable interest rates. It also will provide banks with long term, local currency funding so they can make long term mortgages without taking on interest rate risk” said Alison Harwood, IFC’s Principal Securities Market Specialist. “Other firms with assets and receivables to securitize will also benefit from greater access to bond financing.”
“Increasing the availability and affordability of housing finance, and access to securitization as a tool to support this objective, is central to IFC’s financial markets program in Russia, “ said Edward Nassim, IFC’s Director for Central and Eastern Europe. IFC is helping build Russia’s primary housing finance market, including providing $235 million in loans to three Russian banks to build their mortgage portfolios. IFC currently is preparing a large-scale technical assistance project to strengthen the skills and capabilities of mortgage lenders, create standardized mortgage products and documentation and improve the legal environment. Earlier, IFC advised the government on the Mortgage Backed Securities Law.
The Working Group evolved from IFC’s Conference on “Securitization in Russia: Challenges and Opportunities” held in Moscow in December 2002. It includes representatives from the Moscow offices of law firms (Baker and McKenzie, White and Case), Standard and Poors, accounting firms (Finamatics, PriceWaterhouseCoopers), banks (Alfa Bank, Russian Standard Bank, Sberbank) and the State Duma and Central Bank. IFC hired the global firm Freshfields Bruckhaus Deringer to advise the group given its extensive international experience with securitization. The Working Group has been funded by the UK Department of Trade and Industry Trust Fund and IFC’s Trust Fund.
International Finance Corporation (
www.ifc.org
).
Russia joined IFC in 1993. Since then through the end of June, 2004, IFC has committed $1.8 billion, including $210 million in syndicated loans, to finance 91 projects in Russia across a variety of sectors, including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care.
The International Finance Corporation is a member of the World Bank Group. IFC’s mission is to promote sustainable private sector investment in transition economies, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the emerging markets, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
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