Non-bank CFO says while the amendment to the EU reform is good, it's not the perfect outcome
Australian non-banks breathed a collective sigh of relief following the European Parliament’s decision to remove a prohibition against European investors purchasing Australian residential mortgage-backed securities (RMBS) last month. But while the way the new regulation was amended was largely a positive outcome, the addition of a reporting requirement has meant there is still some uncertainty as to the future funding of non-banks.
Firstmac chief financial officer James Austin told MPA, “It’s not the perfect outcome but it’s pretty good nonetheless in that European investors are able to invest.
“We would have hoped that Australia was removed from the Annexure II altogether, but instead investors are able to invest in Australian RMBS, however they still have a reporting requirement to report that they have done so. That shouldn’t be too much of a burden but, nonetheless, it’s still there and is an added overlay.”
Whether or not Australia is eventually removed from Annexure II, a list of countries deemed to engage in “harmful tax regimes,” hangs on whether the Australian government’s proposed legislation to reform its taxation of overseas banking units (OBUs) operating in Australia is passed. Last week, CEO of the Australian Securitisation Forum (ASF) Chris Dalton told MPA the ASF expected the legislation to receive bipartisan support.
For now, while his outlook is optimistic, Austin said only time will tell as to how the legislation will impact Australian non-banks, which get up to one-third of their funding from Europe.
“Hopefully it’s positive,” he said. “We should find out over the next couple of weeks with a few RMBS deals coming to market, so that should give us a pretty good feel for where European investors are at.”
And as for the future funding of non-banks, “I think it’s going to be OK,” he said. “I can’t say that with certainty because of that reporting requirement, but I think it is going to be OK.
“I think we can say that it has been a positive development and it’s removed some of the uncertainty around ongoing funding access coming out of Europe, including warehousing facilities that are provided by European banks to some non-banks. This is quite a positive in terms of giving funding certainty.”