Investment portfolios contain several types of rights, commercial paper, bonds and shares. Sometimes the maturity of the security lies in the far future. The supply and demand and the day to day market price then decides what a realistic value is. A liquidator often cannot wait until maturity to collect on the investments; and therefore, he often chooses to sell the assets. One of the potential buyers is a consortium of our customers, the creditors of the bank. By buying the investment portfolio we anticipate on a return on investment which is paid to the consortium on a pro rata basis, alongside the proceeds from the liquidation.

Depending on the agreement we conclude with the administrator or liquidator a profit share agreement is discussed. This means that when our customers benefit from a combination of the administration, liquidation and settlement transactions, the return on investment on the asset purchase programs is added to the payout percentage.

Custodian banks holding the securities accounts of the financial institution and its clients, often hold the securities until there is clarity on the liquidation. Once the securities are released to the failing financial institution, the value of the assets becomes part of the estate of the bank. One of the duties of the liquidator is to liquidate the assets of the bank and make these available for distribution to the creditors based on the prescribed creditor hierarchy. The result is that securities that have not matured yet can be sold to any approved buyer. To serve the best interest of our customers who are creditors of the failing bank, we purchase the securities so that our clients can benefit in both ways.