J-CORE 5 transaction
Deutsche Bank advised
Under an industry-wide directive from the Financial Service Agency, Resona Bank was looking to reduce the overall level of non-performing and sub-performing loan risk on its consolidated balance sheet. To achieve this it would dissolve two of its subsidiaries and remove their assets from their balance sheets. However, Resona wanted to retain some interest in the subsidiaries’ loan portfolio, which was mostly secured by property collateral.
To achieve this, the risk profile of the portfolio was segmented by structuring multi-layer trusts that took the assets off the balance sheets of the subsidiaries but allowed Resona to retain a portion of the upside. Deutsche Securities Limited then successfully issued and placed J-CORE 5 Trust Certificates of ¥26.9bn.
To retain a servicing role in the loan portfolio to maintain relationships and generate ongoing fee revenue, Resona Servicer Co was created. The innovative structure was highlighted by judges for maximising economic returns.
