With origination of securitizable assets slipping among leading developed countries, the vice grip on global liquidity still unshakable, and Western European investors loathe to buy all kinds of ABS and MBS, it would follow that Russian originators of securitizable assets would be yanking the reins on their galloping pace of lending.

So far, that's not quite the case.

Origination among Russian banks boomed right through the series of shocks that seized international credit markets - and seized up lending in many sectors - through the end of 2007. Total origination of mortgage loans, for instance, hit RUR438 billion ($18.6 billion) for the entire 2007, up 143% from nearly RUR180 billion in 2006, according to Russia's Central Bank. What's most interesting is that origination in the final quarter of 2007 was RUR157 billion, up 91% from RUR82 billion in the same quarter of 2006. Growth may have slowed somewhat but it remained inarguably robust.

Compare this with the U.S., where fourth quarter origination of single family homes totaled $456 billion, down 34% from $690 billion in 4Q06, according to the Mortgage Bankers Association. The projected figure for 1Q08 is $559 billion from $626 billion a year earlier.

Naturally Russia is starting from a much lower base, and hence there's much more room to generate mortgages. Right through the end of the year, the origination game in Russia was drawing new players, and the number of credit institutions that had granted mortgages reached 586 by the year-end, up 29 from the end of the third quarter. But even factoring in the entry of new players, among many of the more established players lending still rose. Societe Generale unit Delta Credit, for instance, cranked out an average RUR62 million in the second half of the year, up from a monthly average of RUR41 million in the first half, according to the bank.

But what about the first quarter and beyond?

"Delta Credit is continuing to set records every month in origination," said Serge Ozerov, chief financial officer for the originator, which debuted an RMBS in April 2007.

Russian Standard Bank (RSB), which has collateralized car loans, consumer loans and credit cards, acknowledges a drop in the growth of origination of consumer assets but said it had nothing to do with the global liquidity drought. It's a by-product of tighter lending criteria. RSB Senior Vice President Levan Zolotarev said the bank has gone from an approach in which "good customers were paying for the bad ones" to one in which "good and bad customers pay for themselves."

Russia's consumer finance industry is witnessing shrinking margins and increasingly choosy customers. But that only means origination growth is off its dizzying heights, not crashing. "In general the time when all the banks active in consumer finance were doubling their credit portfolios each year is in the past," Zolotarev said. The growth he projects? A paltry 30% to 35%.

Right now, RSB's feeding its origination machine with deposits, domestic bonds, bilateral loans, warehousing, and revolving facilities with multilaterals International Finance Corp. and European Bank of Reconstruction and Development. Other banks of its stature that are in the mortgage game are no doubt funding in similar ways. But the smaller fry are definitely hurting. Some that had only stepped into the market recently have stopped originating, according to market observers. This could skew the overall figure of mortgage growth slightly down.

For the established lot, white-hot credit expansion surely can't withstand a crunch that lasts much longer. The thing is that the warehousing facilities that a number of the bigger-name Russian banks opened with Western banks are probably not fully drawn, sources said. But once they are, if the terms for rolling over get tighter, then a major spigot might be turned off.

(c) 2008 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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