TIDMEJFI TIDMTTM
RNS Number : 5424U
EJF Investments Ltd
29 March 2023
FOR IMMEDIATE RELEASE
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES,
ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (OTHER THAN THE
REPUBLIC OF IRELAND), AUSTRALIA, CANADA, SOUTH AFRICA OR ANY OTHER
JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
29 March 2023
EJF Investments Ltd
(the "Company" or "EJFI")
Exposure to Regional Banks
In response to recent events in the US and European banking
markets, the Board of the Company believe it appropriate that
additional disclosure on the Company's underlying positions in its
Risk Retention exposures and market background be provided by EJF
Investments Manager LLC (the "Manager"). Accordingly, the Company
notes the following information from the Manager:
-- The Company has no exposure to SVB Financial Group ("SVB") or
Signature Bank ("Signature"), the two US Regional Banks that
regulators put into receivership earlier this month ("US Regional
Banks" being those US banks with assets between USD50bn and
USD250bn).
-- The Company has no exposure to debt issued by European banks.
-- The Company holds cash balances with BNP Paribas and Citi.
-- Of the Risk Retention exposure within the collateral, which
represents approximately 70% of the gross asset value of the
Company as at 28 February 2023, there were 260 US banks and 113
insurance companies, of which 162 US banks and 41 insurance
companies were unique issuers.
-- The largest exposure to any single bank is approximately 3%
of the total outstanding underlying principal across all seven Risk
Retention deals in which the Company is invested.
-- As published on 15 March, 2023, the Company's combined
exposure to Silvergate Capital Corporation ("Silvergate"), which
went into voluntary liquidation on 8 March, 2023, is equivalent to
less than 2.5% of the Company's most recently published NAV on a
look through basis, prior to any recoveries. The Manager currently
believes there may be a recoverable value noting that both
Silvergate's equity and preferred equity are currently trading with
a positive economic value in the market, and that the Company's
position is structurally senior to both of these.
-- With respect to EJFI's remaining exposures, the Manager has
identified three US Regional Banks, within the collateral, which
may share some of the attributes of SVB and Signature: (1) a
relatively concentrated deposit base; (2) a greater than average
level of uninsured deposits; and (3) a greater than average held to
maturity and/or available for sale securities portfolio that has
unrealised losses as a result of the steep rise in interest rates.
In combination, the exposure of the banks identified by the Manager
of this nature is less than 9% of the Company's most recently
published NAV on a look through basis. It is important to
emphasise, however, that notwithstanding this identification, these
banks remain operational.
-- In addition, it is the Manager's belief that a distinction
should be drawn between the business models of community banks and
those of SVB, Signature, Silvergate and the three US Regional Banks
discussed above. In general, community banks with less than USD50bn
in assets have more secure and less monoline deposit bases.
-- The Manager believes that the recent events will result in
more regulatory changes and, in the long term, those changes will
accelerate consolidation in the industry as risk and compliance
costs increase. Although consolidation will continue, the Manager
believes that community banks will continue to play an integral
part of the US economic system.
-- Furthermore, the Manager expects that these potential
regulatory enhancements will serve to further buttress the strength
of smaller, i.e. community banks, and medium sized banks in the US.
Community banks represent a significant portion of total lending in
the US: approximately 55% of commercial real estate loans; 29% of
residential real estate loans; 24% of commercial and industrial
loans; and 14% of consumer loans.
-- Community banks also enjoy broad bipartisan political
support, this sentiment being clearly articulated by the US
Treasury Secretary, Janet Yellen, on 21 March 2023 in her testimony
before Congress: "Large banks play an important role in our
society, but so do small and mid-sized banks. These banks are
heavily engaged in traditional banking services that provide vital
credit and financial support to families and small businesses. They
also increase competition in the banking sector and often have
specialized knowledge and expertise in the communities they invest
in. Indeed, many of these banks have played an important role in
supporting our economic recovery."
ENQUIRIES
For the Manager
EJF Investments Manager LLC
Peter Stage / Jay Ghatalia
pstage@ejfcap.com / jghatalia@ejfcap.com
+44 203 752 6775 / +44 203 752 6776
For the Company Secretary and Administrator
BNP Paribas S.A., Jersey Branch
jersey.bp2s.ejf.cosec@bnpparibas.com
+44 1534 813 967 / +44 1534 709 189
For the Broker
Liberum Capital Limited
Darren Vickers / Owen Matthews
+44 (0) 20 3100 2218 / +44 (0) 20 3100 2223
About EJF Investments Ltd
EJFI is a registered closed-ended limited liability company
incorporated in Jersey under the Companies (Jersey) Law 1991, as
amended, on 20 October 2016 with registered number 122353. The
Company is regulated by the Jersey Financial Services Commission
(the "JFSC"). The JFSC is protected by both the Collective
Investment Funds (Jersey) Law 1988 and the Financial Services
(Jersey) Law 1998, as amended, against liability arising from the
discharge of its functions under such laws.
The JFSC has not reviewed or approved this announcement.
LEI: 549300XZYEQCLA1ZAT25
Investor information & warnings
The latest available information on the Company can be accessed
via its website at www.ejfi.com .
This communication has been issued by, and is the sole
responsibility of, the Company and is for information purposes
only. It is not, and is not intended to be an invitation,
inducement, offer or solicitation to deal in the shares of the
Company. The price and value of shares in the Company and the
income from them may go down as well as up and investors may not
get back the full amount invested on disposal of shares in the
Company. An investment in the Company should be considered only as
part of a balanced portfolio of which it should not form a
disproportionate part. Prospective investors are advised to seek
expert legal, financial, tax and other professional advice before
making any investment decision.
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END
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