Mortgage Agency Unveils Liquidity Plan

The Agency for Housing Mortgage Lending, also known as AIZhK, on Tuesday unveiled plans to increase the amount of collateral that cash-strapped commercial banks can use for Central Bank funding, including guarantees for their mortgage-backed securities.

The agency's head, Alexander Semenyaka, said it was ready to guarantee up to 500 billion rubles ($18.55 billion) worth of such securities.

"We have every reason to believe that in the nearest future the Central Bank will include in its Lombard list [mortgage-backed] securities backed by AIZhK," he said.

The measure should enable the commercial banks to borrow more money from the Central Bank at a time when the global credit crunch has sapped other sources of funding and capital flight from emerging markets has significantly reduced the domestic interbank market.

The agency, a state-owned company charged with the development of the home loan market, also plans to place its own mortgage-backed securities by means of swapping them for a pool of mortgages from commercial banks this year and next.

"The demand from banks is big. … The placement will be in the form of an exchange agreement — [the bank] buys our bonds, and we buy its assets," Semenyaka said.

"Mortgage bonds have a rating, so banks will take them and then use in repo auctions with the Central Bank."