Russia’s Regional Markets: Refinancing through a Specialised Bank February, 2008 Zurich, Switzerland
GPB-Mortgage Information Joint Stock Bank GPB -Mortgage ØJoint-Stock Bank «GPB-Mortgage» was founded in 1988 as a state owned banking entity Commercial Bank «SOVFINTRADE» ØIn 2005 Commercial Bank «SOVFINTRADE» was repositioned as a specialized entity concentrating exclusively on originating mortgages in the residential mortgage market ØIn 2007 Commercial Bank «SOVFINTRADE» was renamed in Joint-stock Bank GPB-Mortgage Shareholders ØGPB-Mortgage is majority owned by Gazprombank (Open Joint-stock Company). It’s share is more than 70 % ØOver 27 % of GPB-Mortgage’s shares is controlled by Gazprom group ØAnd less then 1 % of shareholding held by third party corporate entities 2
GPB-Mortgage Information Strategic Objectives ØTo become the largest specialized mortgage lending bank in Russia ØTo create a structure which will allow the purchase, refinancing and servicing of mortgage loans across all over of the Russian Federation ØTo increase capitalization of the Bank Peculiarities of the Project ØAs for the number of securitised mortgage loans (app. 16 billion RUR) GPB-Mortgage is a leader among Russian banks ØGPB-Mortgage’s business model is based on a developed regional servicing network which procures for origination, refinancing and servicing of mortgage loans ØThe regional network covers almost 50 Russia’s regions with the highest mortgage lending perspectives 3
GPB-Mortgage Information The Main Stages of Development Ø May 2005 – mortgage loans refinancing business started ØDecember 2005 – establishment of own corporate regional network for origination, refunding and servicing of mortgage loans ØNovember 2006 – inaugural domestic RMBS transaction – first ever on the Russian market (app. 3 billion RUR) ØDecember 2006 – successful cross-boarder RMBS transaction (app. 6 billion RUR) ØJune 2007 – first repeat cross-boarder RMBS transaction of a Russian Originator (app. 7 billion RUR) 4
GPB-Mortgage Standing of the GPB-Mortgage The Results ØNet Profit ØEquity ØReturn of the Share Capital 5
GPB-Mortgage The Structure of Regional Mortgage Lending Two-tier model used in origination and servicing process: Ø Ø Tiered Originating and Servicing BORROWERS the structure allows to originate mortgage in the geographically diverse regions of the country it establishes the standard approach to origination and underwriting Small Regional Banks Initial Lender Servicing Regional Servicing Companies Mortgage Sale Regional Operator Mortgage Sale Ø it allows GPB-Mortgage to maintain the high-quality origination standards GPB-Mortgage Capital Markets/ Long-term Funds 6
GPB-Mortgage Participants of the Regional Mortgage Market Cooperation Sale of loan Initial Lender Loan par amount Servicing of mortgage loans Regional Operator Sale of loan GPB-Mortgage Loan par amount Servicing fee Mortgage Borrowers Participants and Functions Ø Initial Lenders: Participants: small or medium regional banks with little or no access to long term funds Functions: act as initial lenders / underwrite mortgages originated in accordance with the underwriting standards developed by GPB-Mortgage Ø Regional Operators: Participants: non-banking organisations which are controlled either by GPB-Mortgage or by local government Function: acquire mortgage certificates from the Initial Lenders and on-sell them to GPB-Mortgage Opportunities: high professional underwriting of the mortgage loans Ø GPB-Mortgage: Function: - creation of unified standards of mortgage lending and refinancing - providing access to long term funds - development of the IT-network for mortgage lending and servicing processes 7
GPB-Mortgage Russia’s Mortgage Market: Ranking Russian Banks Leaders of the mortgage lending/ refinancing by quantity of the mortgage loans, qn. The Leaders of the Mortgage Market The disproportion between volume and quantity of mortgage loans show the right balance of GPBMortgage’s portfolio : Øthe average size of given out loans is less than at the other participants of the market Leaders of the mortgage lending/ refinancing by volume of mortgage portfolio, ths. RUR Ødiversification of the mortgage portfolio on regions 8
GPB-Mortgage Program of Refinancing: Corporate Regional Network Petrozavodsk Cherepovets Archangelsk Vologda St. -Petersburg Yakutsk Kostroma Vladimir Nizhniy Novgorod Kazan Syktyvkar Kirov Bryansk Kemerovo Omsk Tula Voronezh Rostov Krasnodar Saratov Perm Tolyatti Stavropol Dimitrovgrad Krasnoyarsk Chelyabinsk Ufa Ulan-Ude Novosibirsk Izhevsk Blagoveshchensk 9 Vladivostok Orenburg Magnitogorsk Barnaul Gorno-Altaisk Irkutsk Khabarovsk
GPB-Mortgage Program of Refinancing: Corporate Regional Network Efficiency and Professionalism of the Corporate Regional Network Corporative regional network establishment dynamics Ø As of 1 January, 2008 the mortgage portfolio being served by GPB-Mortgage and it’s Corporate regional network amounted to 27. 24 billion RUR Ø The quality of the mortgage portfolio is confirmed by high credit rating of it’s mortgage backed securities, given by rating agencies Ø The total stuff number of the Corporate regional network is about 500 employees Ø Corporate regional operators provided more than 70% of the overall volume of mortgages originated by the Bank Ø By the end of 2006 the Corporate regional network reached self-repayment Ø One of the participants of the Corporate regional network was rated by Moody’s successfully which benefits the Bank’s high-rating obtaining strategy for the whole Corporate network • 2005 – 5 Regional corporate operators • 2006 – 25 Regional corporate operators • 2007 – 38 Regional corporate operators • 2008 – non less than 50 Regional corporate operators 10
GPB-Mortgage Automation of the business stages Information system Originators and Settlement Banks’ Level AISPIC Automated information system of the Originator Portal for the Settlement Banks Mortgage Operator’s Level TISIO Information system of the mortgage operator United management and account system Mortgage portal Interaction with the partners at refinancing and servicing Debt Collection GPB-Mortgage’s Level System Internal systems of GPBMortgage Workflow system (EMS Documentum) 11
GPB-Mortgage Common Underwriting Standards Underwriting Process Standards Ø Specially developed underwriting and servicing standards were worked out by GPBMortgage for Initial Lenders and Regional Operators participating in GPB-Mortgage’s mortgage programme Ø In order to participate in GPB-Mortgage’s mortgage programme, both the Regional Operator and the Initial Lender are to underwrite mortgages strictly in accordance with parameters set by GPB-Mortgage If such parameters are not adhered to, the loan is rejected during the repeat underwriting process Ø In addition to the underwriting standards, GPB-Mortgage provides the participants of the mortgage programme with an integrated software system which allows to carry out repeated checks of refinancing loans’ quality. Ø In the middle of 2007 GPB-Mortgage and Agency for Home Mortgage Lending (“AHML”) have entered into the agreement on joint activity on creation uniform procedures of servicing and information exchange Repeat Underwrite Potential Borrowers Initial Lender Initial Underwrite Regional Operator GPB-Mortgage Final Underwrite 12
GPB-Mortgage Regional Statistics: Quality of the Underwriting 13
GPB-Mortgage Loan Servicing: Arrears Management Standing Order of Arrears Management ØIn case of occurrence of the delayed debts Regional operators undertake the certain actions set by the Standing order of the GPB-Mortgage Regional operator informs the borrower over the telephone and in writing of the fact that his mortgage is in arrears Second postal notice of the arrears Notice of loan acceleration with a demand to settle the mortgage backed debt, interest and penalties immediately and in full A day for sending the claim to court Number of Days Following Commencement of Arrears 6 30 38 40 55 60 RO informs the RO presents to borrower that the GPB-Mortgage a mortgage is more than detailed report 30 days in arrears. with relation to Commences the borrowers that in information gathering arrears and the process as to the reasons for reasons behind the arrears 75 120 The Servicer has the right to sell the mortgage certificate to a third party ØGPB-Mortgage in a current mode traces statistics of the delayed debts on servicing portfolios and supervises spent work on its clearing 14
GPB-Mortgage Efficiency of the Arrears Management The Average Period of Extinguishing the Arrears in 2007 15
GPB-Mortgage Perspectives of development of business Corporate regional network covering most of Russian’s regions can provide considerable underwriting and servicing facilities for the securitisation transactions planned Contacts Alexander Egorov (GPB-Mortgage) Deputy Chairman of the Board +7 495 223 40 40 AEgorov@gpb-ipoteka. ru 16
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