Malta has been quite innovative in providing certain infrastructure for the securitisation cell company (SCC) and securitisation in general. According to the MFSA, 30 securitisation vehicles have launched so far this year, and Sparkasse Bank Malta, plc. has been a beneficiary of this phenomenon.
As Paul Mifsud, Managing Director at Sparkasse Bank confirms: "We are seeing a good level of uptake in this area and the bank is well positioned to add value to this structure by being able to give the debt security within a segregated cell a degree of transferability and mobility by having it dematerialised and held with a local Central Securities Depositary (CSD)."
The Maltese Securitization Act covers three main types of securitisation: asset securitisation, synthetic securitisation and whole business securitisation. To further strengthen Malta's position, an innovative piece of legislation – the Securitization Cell Companies Regulations – was enacted on 28th November 2014. This improves investor protection by formally recognising the segregation and protection of assets allocated to segregated accounts, compartments or units within the same company.
An SCC may be established for the purpose of either entering into securitisation transactions or assuming risks as a reinsurance special purpose vehicle. Debt securities may be listed and admitted to trading on a regulated market such as the EWSM, or can be offered on a private placement basis.
"The SCC is certainly attracting the right amount of interest from the right financial structurers. The structure per se, coupled with the possibility of its listing on exchanges such as the Malta Stock Exchange and the European Wholesale Securities Market (EWSM) makes the structure all the more attractive as can also provides for a security in dematerialised format facilitating its transferability too.''
In other words, one can create an SCC in Malta that allows for the creation of cells that can become transferable securities in their own right. As a licensed banking entity, Sparkasse Bank Malta is currently providing infrastructural support to SCC's and their respective cellular assets by providing the necessary portfolio safekeeping and record keeping of the securitised assets similarly as it would do in its capacity as depositary of a fund "We are able to provide banking services to the SCC, and each individual and segregated cell within the SCC," says Mifsud.
In Mifsud's view, however, in order for Malta to become one of Europe's leading securitisation centres, more work needs to be in terms of determining the roles and responsibilities that service providers have to an SCC.
"Similarly to the standard structure within the fund world, where typically a fund would appoint its administrator, investment manger and depositary, I believe that these suite of services should also resonate within the SCC structure. Certain key functions such as that of the calculating agent, paying agent and issuer responsibilities in general may, however, need further definition within the structure," says Mifsud, who continues:
"At present, the banks seem to be assuming some of these services to address this void, which may not be such a good idea moving forward. Risk appetites of banks are highly restrictive and will heavily influence the look and feel of a structure which should be avoid at all costs especially with structures designed for capital market financing.''
Cleary Malta is enjoying good momentum in respect to securitisation vehicles and has the right regulatory regime in place to support institutional asset managers and insurers who wish to avail of the SCC.