JPMorgan and Korea First Bank have consummated their recently forged back up servicing business alliance by announcing JPMorgan’s signing of the Samsung Card Co. Ltd, Credit Card Receivables Securitisation deal.
Arranged by Merrill Lynch, the Samsung deal gave JPMorgan the opportunity to be the first foreign bank and globally recognised name to provide back up servicing in Korea through its alliance with Korea First Bank. The Samsung deal is the first credit card receivables cross border deal in Korea this year.
Back-up servicing is a popular method of structural enhancement for asset-backed transactions and has been used widely across the Asia-Pacific region since the beginnings of the asset-backed market in the early 1990s. It typically provides enhancement through mitigating servicer risk. The creditworthiness of a back-up servicer complements the servicer (i.e. an originator as a primary servicer) in its function and is one of the benefits in seeking a higher rating of ABS.
“Forging the business alliance with Korea First Bank brings the same level of confidence and choice to the market as the alliance we forged so successfully with Credit Saison in Japan,” JPMorgan’s Ben Lumley-Smith, Senior Vice President, ITS Asia Business Manager, Global Debt Services said, “and in both Japan and Korea we have introduced real and effective alternatives to the structured finance arena in our inaugural back-up servicing roles.”
The standardised documentation and servicing standards that the alliance creates will allow speedier execution, greater risk mitigation and quicker time to market for asset-backed and mortgage-backed transactions. This alliance is well positioned to fulfil the servicing and administrative needs of the structured finance market, and is designed to work hand-in-hand with both investors and issuers. The structure of the alliance with Korea First Bank has been designed to enhance a variety of transaction types.