The bank will securitise the bulk of its transport sector financing portfolio for sale to institutions
HSBC yesterday completed a ground-breaking deal to securitise HK$3 billion of its taxi and public light bus loans for sale to institutional investors to improve internal capital management and finance the expansion of its market share in the area.
The deal marked the first synthetic securitisation of taxi and public light bus loans and the first balance sheet securitisation of non-mortgage loans to individuals and small and medium-sized businesses in Asia, according to international law firm Sidley Austin Brown & Wood, which advised HSBC on the deal.
It could lead the way for similar synthetic securitisation offerings - in which banks transferred some credit risk to capital market investors but retained ownership of the assets - in Hong Kong at a time when competitive pressure was prompting banks to offload some credit risk on their balance sheets to improve returns on capital, analysts said.
'It's good for the Hong Kong market to get a new deal,' said a European banker, noting the scarcity of securitisation offerings in Hong Kong and the rest of Asia in recent years.
The deal involves the bulk of about HK$3.5 billion in loans the Hong Kong flagship of HSBC Holdings had made to finance taxi and public light bus acquisitions and connected licensing fees.