Our global relationship bankers are specialists in a full array of corporate banking solutions, from cash management, foreign exchange, custody, clearing, and loans, to capital markets, derivatives, and structured products. Importantly, they also work in tandem with their investment banking partners to introduce our investment banking capabilities to their relationship clients. They can also draw upon the entire spectrum of Citigroup's services beyond corporate and investment banking to serve the needs of clients and their employees, all with the ultimate objective of helping their clients succeed in their businesses around the world. 72
RBI AND INVESTMENT BANKING LEARNING FROM INDIA’S FIRST CDO EXPOSURE: ON WHOM IS THE INVESTORS’ EXPOSURE ? A clarification on whether investing in securitisation instruments is exposure to the originator or to the SPV is important. It is crucial that the isolation from the originator be established and for the comfort of the investor clearly stated by the Reserve Bank of India. In the case of ICCDO most of the major investors have a very high exposure to ICICI. A clarification to investors from RBI to this effect would be a necessity if any of the banks were expected to invest in ICCDO. The method of obtaining this clarification from RBI is as follows: - First, an investing bank has to write a letter seeking a clarification pertaining to exposure for this specific issue. A new structure necessitates an explanation of the instrument to various people at RBI ranging from a Deputy Governor to a Deputy General Manager. The process is time consuming and hence should be done on a Proactive basis. This time period has to be considered while planning a market issue where a similar clarification is required from the RBI. For ICCDO, subsequent to the letter from a Bank to RBI, it took around 12-15 days to obtain the clarification. However it should be noted that the work on this front was started somewhere in the middle of February. In the case of ICCDO, ICICI’s relation with the regulator has played a major role in expediting the clarifications. 73
In the case of the ICCDO issue, RBI has confirmed that investment in this particular issue shall not be an exposure on ICICI. However this issue has not been resolved completely, for the simple reason that this letter from RBI does not state as to whom the investor is exposed to should he invest in the ICCDO. All the same, this letter is very significant as it is the first time that the RBI has chosen to comment on any securitised instrument. It may be interesting to note what the RBI working Committee says on this: - Suggestion in RBI Working Committee Report: “Banks and Financial Institutio ns investing in the ABS/MBS will get exposed to the pool of assets/mortgages/obligors underlying such securities. The institutions therefore, should guard against concentrations of exposures to a particular industry/sector, institution or geographic area.
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