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Friday, December 21, 2007

Cagamas in partnership with HK corporation

Joint development of mortgage guarantee businesses

Cagamas Bhd
has partnered Hong Kong Mortgage Corp (HKMC) in developing mortgage guarantee businesses in Malaysia and other countries.

It entered into an agreement yesterday with its Hong Kong counterpart to form a joint venture company in Malaysia, which will be equally owned by the two parties.

STRATEGIC PARTNERSHIP: Pang (left) and Ooi signing the joint-venture agreement in Hong Kong yesterday

chairman Datuk Ooi Sang Kuang and HKMC executive director Peter Pang signed the agreement on behalf of their respective corporations in Hong Kong yesterday.

At the outset, the joint venture will pioneer a mortgage guarantee programme (MGP) for both conventional and syariah-compliant mortgage loans originated by financial institutions in Malaysia.

The plan is for the MGP to start operation in early 2008.

The strategic partnership will leverage on the synergy between Cagamas' knowledge of the Malaysian and Islamic markets and HKMC's expertise and track record in pioneering mortgage insurance business in Hong Kong.

In a statement issued in Hong Kong yesterday, Cagamas said by providing mortgage guarantee cover to loan originators on a portfolio basis, the MGP will offer an effective tool for banks and other financial institutions in Malaysia to better manage the credit risk exposure from their mortgage lending business.

This mortgage guarantee arrangement will also help to develop the secondary mortgage market and promote home ownership in Malaysia.

With the successful launch of the MGP in Malaysia, the joint-venture company will look for opportunities to develop mortgage guarantee businesses in other markets in Asia and the Islamic housing finance markets.

"The longer vision is that our partnership will stretch to more joint developments of other mortgage business possibilities for us in Malaysia and the Asean region," Ooi said.

"We recognise great opportunities for mortgage guarantee businesses regionally beyond Malaysia, particularly in the Islamic housing finance markets," Cagamas president and chief executive officer Steven Choy said.

Cagamas plans to capitalise on its forte in structuring Islamic financial solutions to develop mortgage guarantee products for these markets, in line to promote Malaysia as an international Islamic financial centre.

HKMC chief executive officer James H. Lau Jr said with its partnership with Cagamas, it will embark on broadening its business horizon beyond Hong Kong.

"As we diversify overseas, we will be gaining new experience that will help the corporation better serve the banking sector and home-buyers in Hong Kong," he added.

The HKMC, which is wholly owned by the Hong Kong Government through the Exchange Fund, pioneered the Hong Kong-based mortgage insurance programme.

By New Straits Times

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