1. Housing Finance for Turkey Linking Primary Mortgage Markets to Capital Markets - the Perspective of a Practitioner Simon Stockley 09/10 November 2004

2. South African Mortgage Market Overview Sophisticated mature – R300billion Dichotomous Dominated by Big 4 Banks Sound legal structure – title & foreclosure Wide margins – no real competition No non bank lending Banks “cash rich” – no shortage of capital Credit data good

3. Total = R 307 bn Source: SARB DI900 Residential SA mortgage loans by lenders South African Mortgage Market Outstanding balance, R bns The SA mortgage market Source: SARB Source: SAHL R millions per month The rate of growth of the SA Home Loans book has been exponential On a monthly basis SA Home Loans now originates up to R1billion in new mortgages This represents approximately 15% of monthly originations Source: Standard Bank

4. SA Home Loans Activities since launch: February 1999 : R15billion : R1.1billion (December 2002) Number of clients: 50 000 Monthly increase in clients: 3 000 Value of loans approved Securitised Portfolio Thekwini Fund I: R1.25billion (December 2001) Thekwini Fund 2 Un-securitised: R6billion Thekwini Fund 3 : R2billion (December 2003) Thekwini Fund 4 : R2.5billion (July 2004)) Single Seller Conduit Programme: R15billion – launch January 2005

5. Why No Securitisation Prior to December 2001? Big is best Rating agencies Exposure to international markets Legal framework not securitisation friendly Little incentive for banks to securitise No ability to reinsure first loss position

6. S A Home Loans The product Its positioning Funding

7. 20 year, variable rate, reducing term mortgage No prepayment or redemption penalties Discounted legal and administrative switch fees No ongoing administrative charges Re-advance facility/access bond Fixed margin above cost of money Switch re-finance proposition The Product

8. Positioning

11. Control Public Special Purpose Vehicle Trust Loans To the Public Senior Securities Subordinated Securities Purchase Securities Independent Trustee External Auditor Origination & Management Fee : 0.5% JIBAR Rate Plus 2.1% 1.6% Yield pick up Securitisation Structure Institutional Investors

12. Public Loans JIBAR + 2.1% Thekweni I Special Purpose Vehicle R1.25 Billion A Class 92 % AAA Rating JIBAR + 70 Points B Class 8 % BBB Rating JIBAR + 230 Points C Class 2.5 % Unrated Pay away 1.6% to investors SAHL 0.5% Management Fee Standard Bank Deloitte & Touche Standby Administrator Investment Structure

13. Public SPV Senior MBS Junior MBS Senior MBS Junior MBS Senior MBS Junior MBS Short Term Insurer Life Insurer SAHL Interim Funder External Directors Auditors MARKET MAKER INVESTORS SECURITIES AND AGREEMENTS THE PUBLICSA HOME LOANSSPECIAL PURPOSE VEHICLES MORTGAGE BACKED SECURITIES INSTITUTIONAL INVESTORS SAHL Legal Structure

14. BBB Thekwini 4 Summary Class A1 R 1,585 m JIBAR + 0.39 % Class B – R 115 m JIBAR + 1.00 % Capital [0.6]% Additional Capital [0.5]% Class A2 - R 643 m JIBAR + 0.39 % Class A3 – R 107 m 10.34% % Class C – R 50 m JIBAR + 2.10 % RatingWAL AAA A 4.18 to 5 yrs 5 yrs Tranching Size of Issue : R2,500,000,000 Originator and Servicer : SA Home Loans (Pty) Ltd Standby Servicer : Standard Bank of SA (Home Loan Division) Arranger & Bookrunner : Standard Bank of SA (Corporate & Investment Banking) Substitution Period : 2.5 years Final Legal Maturity : 21 Nov 2029 Call Date : 21 Nov 2009 Listing : BESA In brief Not rated5 yrs

15. Growth in SA Securitisation Market Public Issuance Volume Public Issuance Deal List SA Home Loans launched the securitisation market in 2001 Since then issuance volumes have grow to R 14 billion in 2003 Source: Standard Bank

16. Investor support to date…

17. Relative value South Africa has seen dramatic growth the capital market since the 1 st bond issue by Telkom in 1999 Spreads on each subsequent transaction have improved SA Home Loans transactions are the benchmark in the securitisation market Source: Standard Bank

18. Securitisation – Cost of Funds History

19. Securitisation A Practical Guide – Some Lessons Learned Size does count Quality of data System reporting ability Time, money, personnel Timing – Market conditions Ratings Pricing “Build it they will come …….”

20. Thank You. Simon Stockley +27 83 2760068 E-mail : simons@sahomeloans.com