G.F. 323
CONFIDENTIAL
機密
Annex to XCU (77)8
Note on the orking Party's Present Thinking
on the Proposed Mortgage Ban
Necd for New Legislation
The mortgage bank will need to be created by statute partly because there are presentational advantages in this, partly because it must be bound to serve the social purpose of promoting ownership and partly because, in the light of its specialised nature, it will function more effectively if its operations were governed by special legislation rather than by the provisions of the Banking Ordinance, the Companies Ordinance or the Deposit Taking Companies Ordinance.
Capitalisation
شیر
2.
The mortgage bank will need to have an appropriato capital structure reflecting its operational requirements, which will initially include the issue of notes guaranteed by the Government, mortgage bonds nd the issue of (partial)
The size of bank's guarantees to the commercial banks. authorised capital cannot be determined until the orking Party has reached a clearer idea of the likely maximum extent of its borrowing and on-lending operations, which must have regard to the caximum requirement for mortgage finance (computed by Rothschilds at 2.5 billion based on preliminary estimates of the building programme and assuming no early redemptions) and to the extent of the commercial banks' participation in meeting those requirements. Rothschilds have suggested that, although the authorised capital will be callable as required, a suitable proportion should be paid up and have suggested a figure of $50 million. The Working Party has not yet reached a view on the amount but agrees that the mortgage bank would have greater degree of flexibility and autonomy if it has some paid-up capital and this is, in fact, consistent with commercial practice.
Borrowing Policies
3.
Rothschilds envisage that the mortgage bank will raise funds through the medium of notes guaranteed by the Government, mortgage bonds and, if need be, wholesale deposits. The precise mix of these funds and their maturities cannot, of curse, be determined at this stage but the mortgage bank's general approach is clear. Given the nature of the operations, it is obvious that the bank should endeavour to match the maturity of its assets and liabilitics as far as possible and, to this end, try -
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Doo S
CONFIDENTIAL
機密
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