Banks Act, 1990 (Act No. 94 of 1990)NoticesDesignation of an Activity not Falling within the meaning of "The Business of a Bank"Exemption Notice relating to Securitisation Schemes8. Underwriting |
| 1) | Conditions relating to underwriting |
| a) | A bank acting as an originator or remote originator in respect of a traditional or synthetic securitisation scheme may act as an underwriter in respect of such a scheme provided that- |
| i) | the assets or risks securitised shall for purposes of calculating a bank's prescribed capital requirement not be regarded as having been transferred from the bank's balance sheet until at least 90 per cent of the total debt raised by the special-purpose institution, other than debt that is regarded as credit-enhancement facilities in terms of this Schedule, has been issued to third party investors provided that the Registrar may in the Registrar's sole discretion and subject to such conditions as the Registrar may determine vary the said percentage of 90 per cent; |
| ii) | once the assets or risks are regarded as having been transferred from the bank's balance sheet in accordance with subitem (i) above, any senior commercial paper held by the said bank acting as an originator or remote originator in respect of the securitisation scheme in excess of 90 per cent of the total debt raised shall for purposes of calculating a bank's prescribed capital requirement be regarded as a second-loss credit-enhancement facility |
| b) | A bank acting as a sponsor in respect of a traditional or synthetic securitisation scheme may act as an underwriter in respect of such scheme provided that, at the end of the underwriting concession period, any retained- |
| i) | senior commercial paper to which an eligible institution of worse than BBB- or the equivalent thereof shall for purposes of calculating a bank's prescribed capital requirement be regarded as a first-loss credit-enhancement facility in terms of the Regulations relating to Banks; |
| ii) | senior commercial paper to which an eligible institution has assigned a credit rating of BBB- or better, or the equivalent thereof, shall for purposes of calculating a bank's prescribed capital requirement be risk weighted in accordance with the relevant requirements specified in the Regulations relating to Banks; |
| iii) | senior commercial paper to which an eligible institution has not assigned a credit rating shall for purposes of calculating a bank's prescribed capital requirement be treated in accordance with the relevant requirements specified in the Regulations relating to Banks. |