Bankers' Views on Securitisation in South Africa

Asset securitisation is still in the embryonic stage of its development in South Africa. This paper documents the views of a group of senior bankers regarding the likely future trend of securitisation in South Africa. They are not convinced that the benefits of securitisation currently outweigh the costs, but believe that the phenomenon is likely to gather momentum.

The primary advantages of asset securitisation are perceived to be that it provides savings on capital, has the potential to increase the non-interest income earned by banks, can improve returns ratios and will provide diversification benefits to investors.

Major concerns expressed are that it is initially a complicated and time consuming process with high transaction costs. The reluctance of investors to accept these new securities is expected to be the most significant obstacle to their growth.