Securitisation is the process whereby assets (such as illiquid loans and other receivables) are packaged, underwritten and sold in the form of asset-backed securities to investors. It enables the group to access funding markets at ratings that are typically better than its own corporate credit rating. This generally provides access to broader funding sources at more favourable rates. The removal of the assets and supporting funding from the balance sheet enables the group to reduce the cost of on-balance sheet financing and to manage potential asset-liability mismatches and credit concentrations.
FirstRand uses securitisation primarily as a funding tool. The ability to securitise assets depends on the availability of eligible assets, investor appetite for securitisation paper and the availability of alternative funding sources. All assets on the group’s balance sheet are considered possible exposures that could be securitised within market constraints. The group obtains the required internal and external approvals for any proposed transactions.
For more information on how the group manages securitisation, refer to pages 125 to 131 of the group’s
Basel Pillar 3 disclosure for the year ended 30 June 2022.