Co-op Bank to sell £1.5bn of 'risky' mortgage assets

The lender has completed the first part of a securitisation process to sell a portion of the Optimum loan book that it took on after acquiring the Britannia Building Society in 2009.

Warwick Finance One comprises a portfolio of £1.5bn residential mortgages. The Warwick Finance One transaction's pro forma impact would have increased the Bank's 31 December 2014 core equity tier one ("CET1") capital position by approximately 0.9%, from 13.0% to 13.9%.

The successful closing of this transaction forms a key component of the Bank's plan to accelerate the de-leveraging of its non-core assets, including Optimum.

These assets were found to be susceptible to severe stress, and Co-op has estimated a reduction in 'risky' assets by approximately £5.5bn by the end of 2018.

Grahame McGirr, Managing Director of CoAM, with responsibility for the Bank's Non-Core businesses, said:

"We are pleased with the reception in the market for this inaugural transaction which is the largest fully-marketed placement of UK Non-Conforming RMBS since 2007, and demonstrates the good progress the Bank is making to reduce its risk profile and build resilience."