Household mortgage lending is an efficient instrument to help the government address a major social and economic challenge it presently faces, that is, to provide a wide range of housing facilities to the country’s population. Against this background, Vneshtorgbank has identified the development of a national mortgage lending system as a strategic priority.
In October 2003, the bank launched a Housing Mortgage Programme, and as an initial step opened a specialised Moscow Mortgage and Consumer Lending Centre.Currently, the Mortgage and Consumer Lending Centre is the first branch of the bank to offer its customers comprehensive consumer lending services, ranging from mortgage applications to entering into transactions and handling of loans.
In addition, a whole range of retail banking services is made available to both existing and prospective customers. This comprises opening foreign currency-denominated and rouble-denominated accounts, fund transfers outside and within the Russian Federation, including through the Western Union system, leasing individual safe deposit boxes, among many other services.
Alongside this, the Centre is proactively engaged in designing and promoting innovative mortgage products to the market.
In the near future, a number of new banking products and services will be offered to the market as part of the programme. These would allow provision of loans for housing construction in progress, as well as for the construction, purchase and interior decoration of real estate in the suburbs.
Underpinning the programme lies an emphasis on gaining a leading position on the mortgage market throughout all Russian regions. In line with this, a Mortgage and Consumer Lending Centre was opened in March 2004 in St Petersburg. With further progress, the Housing Mortgage Programme will focus increasingly on the regions. In addition to St Petersburg, among priority regions to be covered by the bank in the housing mortgage business will be Kazan, Yekaterinburg, Khabarovsk and Tyumen.
The Bank is set to further extend the reach of its Housing Mortgage Programme to cover all federal districts. And while building up itsown mortgage lending facilities, the bank intends to cooperate with local administrations in developing regional mortgage programmes as well.
The implementation of the Housing Mortgage Lending Programme will enable the bank quite shortly to meet the following objectives:
- to gain leadership on the Moscow and St Petersburg mortgage markets (at least 50% of the market share); and
- to obtain at least a $133m mortgage portfolio with a minimum 98% to 99% return rate.
In the medium term, the programme sets out the following strategic goals:
- to win a leadership position on the national primary and secondary mortgage and consumer lending markets;
- to become a national mortgage operator covering domestic regions and setting standards for all other market players; and
- to position the bank as a leading player on the mortgage-backed security market with bonds quoted both on the national and global markets.
This article was contributed by Vneshtorgbank
