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  • Parties in a Securitisation Structure

    • CA-8.2.1

      From a capital adequacy perspective, the parties in a securitisation structure include the originator, the issuer and the investors, in addition to which the following may be involved: an institution that acts as manager of the issuance, a servicer to service the underlying assets,39 one or more credit rating agencies to rate the Sukuk, an investment banker to act as an adviser or to place the securities with investors, and (in some Sukuk securitisations) an institution that acts as a provider of credit enhancement.40

      39 Depending on the structure of the Sukuk securitisation, a servicer may perform different functions for management of the underlying assets in the Sukuk — for example, to collect payment, handle related taxes, manage escrow accounts and/or remit payments.

      40 See Paragraphs CA-8.2.22 to 27 for details.

      January 2015

    • CA-8.2.2

      An Islamic bank licensee may act as originator of Sukuk issues where the ownership of assets held by the Islamic bank licensee is transferred to holders of Sukuk by means of a securitisation. Such a securitisation may offer the Islamic bank licensee one or more of the following benefits:

      (a) Increased liquidity, since a relatively illiquid asset (such as an asset held as lessor in an Ijara or Ijara Muntahia Bittamlīk) is converted into cash paid by the investors in the Sukuk subscription; and/ or
      (b) Reduced capital requirements, insofar as the securitisation may permit the issuing Islamic bank licensee to exclude the assets from the calculation of its RWAs.
      January 2015

    • CA-8.2.3

      The achievement of the second of these benefits will depend on the way in which the securitisation is structured. For this, the Islamic bank licensee must be able to derecognise all or most of the exposures relating to the assets from its balance sheet, according to the criteria for de-recognition set out in Paragraphs CA-8.2.20 to 22.

      January 2015

    • CA-8.2.4

      An Islamic bank licensee may act as sponsor of a Sukuk issuance or similar programme involving assets of a customer in which the Islamic bank licensee manages or acts as adviser to the programme, places the Sukuk into the market, or provides liquidity and/or credit enhancements. In this case, the benefit to the Islamic bank licensee would be the earning of fees for the services provided, but the Islamic bank licensee will incur capital charges if it offers credit enhancement (as outlined in Section CA-8.4).

      January 2015