Russia's DeltaCredit Bank, on target to be wholly acquired by Societe Generale, is eyeing the securitization market. "[We] do have plans to securitize mortgages in the future," said CFO Serge Ozerov. He added that the bank has "concrete plans for a covered bond issue," to be placed domestically.
Specializing in mortgages, the bank expects to originate over $100 million in loans this year. DeltaCredit had total assets of $149 million at June 30, according to a report by Moody's Investors Service. The bank's menu of mortgages ranges from fixed to variable rates in dollars and rubles for terms of up to 25 years, Ozerov said. Individual loans are capped at $300,0000. The bank's share of the mortgage market is roughly 10%, according to Moody's.
Echoing the view of other Russian devotees, Ozerov sees tremendous promise in Russia's mortgage industry, which is widely regarded as underdeveloped. "The Russian mortgage market is growing rapidly, and DeltaCredit projects total mortgage originations in Russia to increase by $20 billion by 2009," he said.
Societe Generale announced August 12 that it had purchased 100% of DeltaCredit from Delta Private Equity Partners. Inked on August 11, the deal is subject to approval by Russian regulators. The purchase coincides with SocGen's development strategy in the international retail business, according to a jointly issued press release. "It will complement and reinforce the Group's presence in Russia, which already includes universal banking (Banque Societe Generale Vostok) and consumer credit (Rusfinance)," the release said.
Moody's gives DeltaCredit a foreign currency deposit rating of Ba2', while Standard & Poor's gives the bank a counterparty credit rating of B'. Following the announced acquistion, S&P put its rating on watch positive, as Societe Generale is rated AA-' by the agency. The new owner's impact on DeltaCredit's credit strength hinges on what effect it has on the Russian bank's business and financial profiles and potential changes in the governance structure, S&P said in a report.
At press time, Moody's had yet to post any changes in outlook for DeltaCredit on its website following the acquisition announcement.
(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.