The finance business
banks have the indispensable instrument of the continuing
mortgage bond issue at their disposal. The necessity of having their
own permanent way of access to the capital market is a typical
problem of the mortgage banks, because they have no other real
sources of finance to draw on. Even after incorporation of the
mortgage banks into the financial ordering in our country on the
basis of the new statutory regulation this necessity continues to
exist.
Although by now the real estate business can no longer be
ignored in the operations of a mortgage bank, this sector of our
business remains limited in extent in view of the statutory sol
vency standards. Our policy therefore is primarily aimed at
developing projects for the market, in which the operation of real
estate by ourselves should be looked upon as a temporary stabling
so as to enable us to dispose of it at the right time. The sale of
real estate that has been let can be made not only to the individual
investor but through the creation of a real estate investment fund.
The development of the nv Beleggingsmaatschappij 'Agora'
marketed by us in 1975 clearly shows that there is a great need
for good real estate investment funds.
The fall in capital interest rates, which set in during the last few
months of 1976 as a result of restored confidence in our guilder,
continued in 1977. If in October 1976 10 mortgage bonds
were still issued, in January of the past year 8 mortgage bonds
were issued successfully. During the third quarter of 1977
mortgage bonds were issued, with which for the time being
interest rates had reached their lowest level.
In addition to the restored foreign confidence in the guilder
mentioned before, the low level of investments and falling
inflation had a marked impact on the development of capital
interest rates in the Netherlands.
Considering the level of industrial investments, which were
largely restricted to the replacement of fixed assets and could
frequently be financed by the companies from their own cash
flows, a credit restriction like that imposed on banking by The
Netherlands Bank during the second quarter of 1977 would seem
illogical at first sight. However, the measure was rather directed
against a continuation of the explosive expansion in granting
mortgage credit, because for the purpose of financing these long
term loans a growing appeal was made to the short-term funds
entrusted to the banks. In this connection the mortgage banks
have complied with the request of The Netherlands Bank to
restrict their publicity activities in the field of mortgage credit.
In 1977 we have for our passive financing drawn on the private
market to a greater extent than on the open capital market. The
overall amount raised from the open and the private capital
market was f 1.415 million. Despite the increased amounts we
had no problems in attracting our passive finance. This may be
accounted for by the strong capital position of FGH and the
fact that the mortgage bond is very attractive as an investment
stock. The appreciation of the mortgage bond is clearly illus
trated by the yield which approximates that of the State bonds
more and more closely. We are trying to additionally strengthen
14 the position of the mortgage bond by increasing the series; this
