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Hertfordshire Housing Conference

Hertfordshire Housing Conference. Clive Barnett, Managing Director, Head of Housing Finance, RBS April 2012. Areas for discussion. Bankers’ perspective Overview of Financial Markets and the Economy

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Hertfordshire Housing Conference

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  1. Hertfordshire Housing Conference Clive Barnett, Managing Director, Head of Housing Finance, RBS April 2012

  2. Areas for discussion • Bankers’ perspective • Overview of Financial Markets and the Economy • Impact of Spending Review, development opportunities, Affordable Rent, Right to Buy sales initiative etc. • Social housing capital and debt requirements for the future • Sources of funding for HA’s 2

  3. The Economy • UK an Island? • A double dip? • Impact of Europe……crisis what crisis? • Inflation a concern or secondary concern for UK • Cost of and availability of funding ECB role/central banks? 3

  4. The CSR impact • Development grant much lower but rents can go up so you can borrow more - greater risk and higher gearing? • Universal Benefit a dream or a reality? • Impact of Direct Payment? • Impact of Benefit cap and over occupation? • Uncertainty? = concern for investors? 4

  5. Investment levels looking forward • Decent homes and new build (social, affordable) • LSVT/ ALMOs, LA borrowing across England, Wales and Scotland • Affordable programme and son of!! • Latest Government announcements Nov 2011 • How much?...£10-12bn over next 3 years • And where is it coming from? 5

  6. Sources – bank and building society • How relevant are the banks to the future? Is the banking market dead? • Declining numbers? • Cost of funding - margins, underlying interest rates and loan maturity • Banks old loan book a continued drag? So what? • Basle 3 and regulatory requirements? • And what about mortgages….NewBuy? • Shared ownership 6

  7. Sources of funding – capital markets • 15 new issues from the RSL sector in 2010/12 • Many more queuing up to issue • Established structure with RSLs achieving the best pricing and execution typical range 4.6%-6% 30 years. • Credit rating Agencies S&P and Moodys work on implicit government support leading to most rated RSLs being notched up although UK downgrade status with Moodys potential. • The sector is positively received by investors given its strong rating, secured nature, implicit government support and long-dated paper and we expect this demand to remain solid. • New source…..Investor direct ? 7

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