Tuesday, February 26, 2013

Saudi banks to feel ‘impact of new mortgage regulations’ in long-term


Reviewing the partial regulations for the Saudi Mortgage Law published by Saudi Arabian Monetary Agency (SAMA), NCB Capital, described as the GCC’s major wealth manager and the Kingdom’s largest asset manager, believes that, while overall positive, the regulations will impact the banking sector only in the medium to long term, if at all.

“The regulation in its current form does not fully tackle issues related to foreclosures of properties and how Saudi banks are expected to participate in the suggested format stipulated in the laws published so far,” said Mahmood Akbar, equity research analyst at NCB Capital. “Indeed, we believe that some banks actually prefer the current framework (salary-assignments) where they have ownership of the property. Nonetheless, we expect short-term price gains in small-cap banking sector and real estate stocks.”

The final approved draft of three of the five laws forming the Real Estate and Financing Law published by SAMA relate to (1) Real Estate Financing (2) Financial Leasing (3) Supervision of Finance Companies. The laws related to foreclosures in case of non-payments, “The Execution Law,” and the “Registered Real Estate Mortgage Law,” however, are yet to be published.
Read more: http://www.arabnews.com/economy/saudi-banks-feel-%E2%80%98impact-new-mortgage-regulations%E2%80%99-long-term

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