Sector developments and company hires

ADB co-financing agreement inked
The Asian Development Bank (ADB) has signed an agreement with five global insurers that will mobilise up to US$1bn of co-financing capacity to support lending to financial institutions in Asia and the Pacific. The Master Framework Program for Financial Institutions will allow ADB to increase its lending to both commercial banks and non-bank financial institutions in the region through the use of credit insurance. 

Under the agreement, ADB has signed an initial three-year partnership with Tokio Marine Group, AXA XL, Chubb, Liberty Specialty Markets and Allianz Trade. The insurers will cover the risk of non-payment on a portion of ADB’s loans to financial institutions, allowing it to transfer credit risk from its portfolio to the insurers’ balance sheets - thereby freeing up capital, managing its exposures and increasing its lending capacity. 

The programme streamlines the underwriting and approval process for risk transfers and will allow ADB to more efficiently mobilise co-financing capacity.

In other news…

Mortimer residual interest sold
LendInvest has completed the sale of its residual economic interest in the Mortimer BTL 2022-1 RMBS for a cash consideration of £5.8m. Citi's secondary trading desk managed the sale process and purchase for onward sale.

In line with LendInvest's strategy to optimise its funds under management while moving more assets off its balance sheet, the transaction will result in a reduction in the Group's gross loans and advances of circa £280m. The transaction brings forward profit recognition for the Group from future financial years and will therefore generate a net pre-tax gain of £3.3m for full-year 2023.

The difference between the cash consideration and the Group's net gain is driven by gross profit lost in the second half of the financial year, and the impact of no longer consolidating the Mortimer BTL 2022-1 entity into the Group's results. The brought-forward profits are offset by the weaker performance in the Group's buy-to-let division, as a result of volatility in interest swap rates in the 1H22.