Investors will be able to purchase residential mortgage backed securities and residual certificates from the Warwick Finance One portfolio, which forms part of a wider portfolio, known as Optimum.
The Bank will retain 65% of the Class A notes on settlement, the only share to be retained by the Co-op within the Warwick structure. The transaction closure will push the Co-op Bank a step closer in releasing itself of unwanted assets, which includes the Optimum portfolio.
In March, reports revealed that the Co-operative Bank was in talks with a number of distressed investment funds in a bid to sell off £6.6bn worth of bad mortgages acquired through its merger with Britannia.
The new deal will help to boost the bank’s core equity one capital position by 0.9%, increasing its rate to 13.9%.
Grahame McGirr, managing director of CoAM, with responsibility for the bank’s non-core businesses, said the transaction demonstrated “the good progress the bank is making to reduce its risk profile and build resilience.”
The merger with the Britannia in 2009 was cited as the root of the Co-op Bank’s financial difficulties by Andrew Bailey head of the Prudential Regulation Authority.
Bailey made the comment in a Treasury Select Committee hearing in February 2014.
