Cynergy Bank has completed its debut securitisation, a cash derecognition RMBS transaction. The deal, named Lovelace CBP 01, is backed by buy-to-let mortgages, secured on residential and commercial properties, and has allowed the bank to achieve capital relief while continuing to serve its core customers – professional landlords.
The transaction features two key innovations compared with precedent transactions in the market: firstly it has a mechanism to ensure that lending to customer groups are either fully in or out of the transaction, avoiding customers straddling the two balance sheets, and secondly it features a 2 year replenishment period, during which time the Bank can sell in further lending to customer groups already in the pool.
Both these innovations reflect Cynergy Bank’s distinctive mortgage model offering; predominantly short-term amortising loans (two to five years) secured across a landlord’s entire portfolio.
Unlike some lenders, at the end of the term Cynergy Bank provides customers with options such as product switches or refinancing, rather than automatically reverting to a standard variable rate.
Those innovations allowed the Bank to structure a securitisation that derecognised loans for capital purposes while still supporting existing customers as they grow.
Lloyds Bank Corporate Markets acted as arranger on the transaction.
Nicholas Fuller, Director of Group Treasury, Cynergy Bank, says: “This transaction demonstrates Cynergy Bank’s ability to innovate in securitisation while keeping customer needs at the heart of our approach. The replenishment period gives us the flexibility to support existing borrowers with further advances and product switches, while delivering capital efficiency and balance sheet optimisation.”
The Lovelace CBP 01 deal is intended to be the first of a regular issuance programme, the Special Purpose Vehicles will be named after UK innovators (Ada Lovelace, pioneer of mathematics and computing, being the first).
These deals will allow Cynergy to fund continued growth capital, the book has expanded from roughly £1.5bn in 2018 to £4.5bn now today.
