Secondary market plan for mortgages welcomed

Updated 24 November 2012
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Secondary market plan for mortgages welcomed

The Kingdom is studying draft regulations that could see the creation of a real estate refinancing company similar to US firm Fannie Mae, according to proposals published by the central bank recently. The regulations are part of long-awaited government efforts to develop a housing mortgage sector in the Kingdom.
The regulations proposed recently fleshed out the laws principally by saying the government may establish Saudi Real Estate Refinancing Corp. to develop a secondary market in home mortgages.
The new corporation, with a minimum registered capital of SR 2 billion, would have to stay majority state-owned but real estate financing companies would be allowed to acquire stakes up to a combined total of 30 percent. The corporation might also offer shares to the public. It could provide the secondary mortgage market with access to both local and foreign financing instruments, the draft said.
Local financial firm Arqaam Capital has said the introduction of a legal framework for mortgages will see the amount of lending to purchase housing in Saudi Arabia eventually double to 12 percent of GDP.
“The problem was how do you get that person to repay if they cannot be kicked out of their house,“Nicholas Diacos of The Law Firm of Saleh Al-Hejailan, told Reuters. “In terms of making competitively priced financing in this market, it was a nightmare because the financiers were pricing the risk into their finance.”


Shell, Exxon not to seek compensation for end of Dutch gas field production

Updated 20 min 19 sec ago
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Shell, Exxon not to seek compensation for end of Dutch gas field production

AMSTERDAM: Energy companies Royal Dutch Shell and Exxon Mobil will not submit a claim for missed revenue due to the Dutch government's decision to halt gas production at the Groningen field by 2030, the Dutch ministry of Economic Affairs said on Monday.
"A lot of gas will be left in the ground," Economy minister Eric Wiebes said at the presentation of his deal with the oil majors responsible for extracting Groningen gas.
"That gas is the property of the oil companies, but they will not submit a claim and the government is not required to compensate them."
The Dutch government in March said it would end gas production at the Groningen field by the end of the next decade, in an effort to stop a string of relatively small, but damaging earthquakes caused by gas extraction.
This will leave around 450 billion cubic meters (bcm) of gas in the ground, Wiebes said, with an estimated value of approximately €70 billion ($81.5 billion).
The decision to halt Groningen production forced the government to broker a new deal with Shell and Exxon Mobil, whose 50-50 joint venture NAM is responsible for the field.
NAM will be required to pump as much gas as the government says is needed in the coming years. In return, it will see its share of the revenue from Groningen rise from 10 to 27 percent, Wiebes said, starting this year.
As part of the deal, NAM will also contribute a total of €500 million to strengthen the economy in the Groningen region.