EMBARGOED: 07.00AM MONDAY 1 OCTOBER MEDIA RELEASE FROM INTEGER NEW HOME LOAN PROVIDER LAUNCHED

by | Oct 22, 2007 | Industry Interest, Media, Media Coverage, Uncategorized

EMBARGOED: 07.00AM MONDAY 1 OCTOBER

MEDIA RELEASE FROM INTEGER

NEW HOME LOAN PROVIDER LAUNCHED 

A new home loan provider was launched today with the stated aim of introducing further competition into the South African home loans market which is currently dominated by the big four banks.

The new company, Integer, led by Simon Stockley who founded SA Home Loans in 1999, has as its investors, Investec and Purple Capital, the listed financial services group.

‘We are aiming to replicate what has happened in many international markets by challenging the status quo with a product that is flexible, very competitive on price and provides customers with a service that is personal, easy and fast,’ said Stockley. ‘In a mortgage market characterized by poor service and high costs, we believe that the market is crying out for a fresh option. We are looking for South Africans who are tired of poor service, high interest rate charges and fees.”

The strong points of differentiation for Integer will be service, product, innovation and price. Integer believe that the average South African home buyer has never experienced the fast, professional and personalized service they deserve when committing themselves to probably the largest single investment they will make in their lives.

Craig Beney, Managing Director said, “Integer’s offering amounts to a range of service and product offerings, usually only made available to private bank clients, but we are for the first time extending this range of product offerings to the mass retail market. Thanks to our custom built IT platform, customers don’t have to adapt and search for features. It comes in a personally tailored package. Our turnaround times will be significantly faster than the current average of 5 to 7 days that characterizes the industry. We aim to achieve a full credit approval, including external valuation, within 48 hours. We will be targeting both new and switch clients.”

Integer offers a standard 240 month amortized home loan with two payment variations. Loans will be offered up to 85% of the home value, and up to an amount of R2,5 m. All Integer home loans come with a standard one percent credit facility on a Visa debit card at their home loan rate, and free internet banking.

Financing for Integer’s loan book will be provided via securitization in the capital markets, a technique pioneered in South Africa by Stockley and SA Home Loans. The South African securitization market has grown exponentially over the last seven years with total issuances exceeding R86.7 bn in August 2007. Stockley says in countries such as the UK and Australia, the use of securitization has allowed the home loan market to evolve to a point where banks now only account for approximately 54% of the mortgage market in the UK, and approximately 75% in Australia. “With the South African debt markets now rated as the 6th most liquid in the world (source:BIS) and the relaxation of exchange controls allowing offshore funding, there is an opportunity for new entrants into the home loan market, increasing competition and benefiting home buyers and owners.

“We do not see the current US sub prime meltdown as a problem for launch,” said Stockley, “but rather as an opportunity. Once the dust has settled, asset managers will once again be seeking quality mortgage assets to fund and we are targeting the very best underlying collateral. Also, an element of caution is not misplaced in the quality of the initial book insofar as that impacts on its rating and the ultimate cost of capital funding.”
For further information please contact:

FD Beachhead
Nic Bennett 0766 877429 / nic.bennett@fd.com
Jean Dennis 021 487 9000 / jean.dennis@fd.com
Integer
Simon Stockley, CEO 0832760068 / simon.stockley@integer.co.za

Personal Profile – Abridged Simon Stockley

by | Oct 22, 2007 | Industry Interest, Media, Media Coverage, Uncategorized

Simon 1 (FEB 2009)Graduating with a Bachelor of Law degree in 1985 Simon Stockley, after serving articles of clerkship, left the profession to pursue an independent career in property development and marketing, establishing and managing the Townhouse Group of Companies over a ten-year period.

In 1998 he began researching alternative funding mechanisms for the South African mortgage market and in January 1999, in association with venture capitalists, established South African Homeloans, South Africa’s first discount home loan specialist and non-bank mortgage lender. He was appointed the company’s first Chief Executive Officer in 2000, a position he held until his resignation in October 2004. Simon was instrumental in raising initial venture capital required in order to establish the enterprise and subsequently negotiated equity participation in the company with The International Finance Corporation, JP Morgan and Standard Bank.

During his tenure as CEO of SA Home Loans, the Company grew its mortgage portfolio from a zero base to in excess of R20 billion ($3.5 billion) and, at the time of his resignation, the business was taking on over 2000 clients per month, claiming a 15% market share of South Africa’s highly competitive mortgage market.

Simon has received numerous awards in recognition of his management and, particularly, his marketing expertise, including The Institute of Marketing Managers’ KwaZulu Natal Marketing Man of the Year Award and The British Airways/Natal Mercury Business Excellence Award.

He has spoken widely, both locally and internationally and has written numerous articles on “securitisation”. He led the team which brought South Africa’s first residential mortgage backed security issue (Thekweni 1) to the market in November 2001 and was, subsequent to this issue, intimately involved in the structuring and marketing of a further three Thekwini bond portfolios. The Thekwini securitisation program was the first private sector residential mortgage backed security issuance outside of Europe, Australia, and the USA and represents an international benchmark for Emerging Markets. Simon is acknowledged as the pioneer of South Africa’s now burgeoning securitisation industry.

Simon consulted exclusively to SA Home Loans for a year subsequent to his resignation and has, since November 2005, been retained by Kingdom Installment as an advisor to the Board. Kingdom Installment is a specialist loan finance company operating in the Kingdom of Saudi Arabia. During this period, Simon successfully launched the Gulf’s first Sharia compliant mortgage securitisation program (KSA MBS) and executed a strategic alliance on behalf of the Company with Arab National Bank and the International Finance Corporation, in terms of which KIC will be recapitalised in excess of $550 million, making it the largest specialist home loan finance company operating in the GCC.

In March 2007, Simon merged his investment and advisory activities under Catalis (Pty) Ltd, through which entity he now consults to a wide range of both national and international clients. Catalis has recently acquired a private equity stake in Integer, a mortgage start-up operation in Cape Town, where Simon is currently deployed as CEO, responsible for launching the company.

In addition to Simon’s executive responsibilities he acts as Non–Executive Chairman to a specialist mortgage finance company in Ghana, Ghana Home Loans, and is also the Non-Executive Vice Chairman of Diamond Mortgages, a Nigerian based mortgage lender.

Still a market for new mortgages – The Times – Published:Oct 14, 2007

by | Oct 22, 2007 | Industry Interest, Media, Media Coverage, Uncategorized

Still a market for new mortgages – The Times – Published:Oct 14, 2007

Well-bonded: Simon Stockley, founder of home-loan company Integer

Former SA Home Loans boss bullish despite sub-prime crisis, writes Marcia Klein

Ahead of yet another interest rate increase this week, former SA Home Loans boss Simon Stockley launched a new homeloan company on Monday.

Integer aims for credit approval within 48 hours. Loans will be offered up to 85% of the home value, and up to R2.5-million. Financing of its loan book will be via securitisation, a technique pioneered in South Africa by Stockley and SA Home Loans.

Marcia Klein caught up with Stockley on his way to Paris.


Is this a good time to launch a new homeloan company given rising interest rates, the credit crunch etc?

Timing is not ideal but then I guess no time is perfect to launch a company. In many respects, however, it works to our advantage.

We are aware and can take cognisance of investors’ concerns and build our loan portfolio in accordance with the lesson learnt from the crisis.

What kind of response have you had since launching?

It has been fantastic — R100-million in applications in the first 36 hours and R120-million by the end of the first week.

As the advertising kicks in this week and mortgage originators come on board we expect higher volumes, with the real spurt towards the end of the year when we launch our own branded sales force. This being said, however, a mortgage business is built slowly, one loan at a time.

Are these new loans or switches from other home loans?

Sixty percent switch, 30% new purchase, 10% refinance on existing bond-free property. Too early to call this a trend but it’s broadly in conformity with our expectations and market research.

What is the difference between Integer and other homeloan providers? You say it is cheaper. How much cheaper and how do you do that?

Price competitiveness, and to an extent parity, is now part of SA’s mortgage landscape. Consumers have been educated to a large extent to shop around and negotiate for a good deal.

It is sad, however, that in many instances loyal customers have to threaten to leave to get a better deal and new customers to a bank often get a better rate than existing clients.

Integer intends levering off its technology platform to compete on price and on service across the full range of banking products. We are not promising to be the cheapest in all instances, but within our target market we are promising to be highly competitive. More importantly, we are adding further choice to SA consumers.

You founded SA Home Loans. Is Integer a copy of SA Home Loans?

Not at all — its funding mechanism [securitisation] is similar but the product offering includes full transactional and Internet banking and the positioning is different.

Loans are up to 85% of the home value so people need to have either paid off some of their loans or must put in 15%. Does this lower your risk?

Yes, in line with the conservative approach to credit. We will relax and expand over time, but given the global credit squeeze we though it prudent to proceed with a level of caution.

What kind of client are you targeting?

The middle income/mass market, with target of loans between R350000 and R2.5-million. From a consumer perspective we are taking what is essentially a private bank offering [one account/sweeping of salary/Internet banking] and extending it to a mass retail base.

What is your view on the sub-prime crisis?

Good wake-up call for the market — credit extension and lending, predominantly in the US, had become reckless and a correction was probably overdue. But the market has tended to overact and now even good-quality portfolios are being tainted.

I expect normality to return over the next six months and for asset managers to once again seek out good underlying collateral. The process has been a healthy correction.

Do you think it will extend to SA?

No. SA capital markets have been largely protected, although there has been some widening of credit spreads with investors seeking a slight premium for perceived increased credit risk. At the retail level we don’t have what could be regarded as a sub-prime market and at the investor level fund managers generally have entrenched relationships with issuers and an understanding of the assets supporting an issue.

When did you leave SA Home Loans and why?

I left in October 2003. It was by that stage a mature business with 500 staff, a mortgage portfolio of over R20-billion, four securitisation issues and over 50000 clients. My sense was that my work there was done and that it was time to hand over to a maintenance management team. I spent two years in Saudi Arabia setting up a Sharia-compliant mortgage bank and doing the first Sharia-compliant property securitisation transaction.

You did not stay there too long. Are you planning to stay at Integer or do you see yourself as a starter of businesses?

 

I was there for six very happy years. I have no specific time frame for Integer but my mandate — which is similar to that which I had at SA Home Loans — is to get the business going, establish the brand and the corporate culture and move on. Very much in line with my business philosophy and skill set; that is, start-ups!

Your views on the property market now and over the next five years?

The market is coming off a period of prolonged and sustained growth. I expect that trend to continue albeit not at quite the same dramatic rate. I am still bullish on property, particularly in the run-up to 2010, and see annual year-on- year growth of between 6% and 10% for at least the next five years.

Are you seeing the emergence of black diamonds in property sales and bond applications?

Yes. The emerging middle class is driving a lot of the activity in the mortgage sector. Exciting thing for us as a new entrant is that this segment does not have strongly entrenched relationships with their banks and, in fact, are often distrustful of the big four so this sector represents a clear target market for us.

How many properties do you own and are they mortgaged?

Two — one in Durban and one in Knysna. One is bonded and one is not. I am currently switching my bond from … I won’t say who from but you can guess! … to Integer.

Do you still think that property is a good investment in SA given the huge price increases over the past few years?

Absolutely. Demand is still good and despite recent price increases, I am of the view that property in SA is still undervalued in global terms.

For the full article on the Times website, please visit : http://www.thetimes.co.za:80/article.aspx?id=586155