Shawbrook Bank completes £343m BTL securitisation of TML loans

  • 05/10/2021
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Shawbrook Bank completes £343m BTL securitisation of TML loans
Shawbrook Bank completed a £343m securitisation of subsidiary The Mortgage Lender's buy-to-let (BTL) loans at the end of September, which will fuel further growth for the specialist lender.


It is the third securitisation that the bank has completed in the last two and a half years. It consists of 2,352 BTL mortgages, secured against properties in England, Wales and Scotland.

It is the second securitsation of BTL mortgages originated by The Mortgage Lender (TML) and will support the group’s “growth objectives, funding strategy and capital management” according to the London Stock Exchange (LSE).

Shawbrook Bank purchased a minority share in TML in 2018 before fully acquiring it earlier this year.

Around £301m of class A notes were priced at 65 basis points above Sonia and were distributed via Lloyds Bank, Bank of America and Barclays. The LSE update added that the margin on these notes is on a par with the lowest margin achieved on a UK BTL transaction since the global financial crisis.

Shawbrook Bank’s chief financial officer Dylan Minto (pictured) said the transaction was a “testament to the strength of business and the markets that we’re in”.

He added: “We want to be able to allow TML to go and really write into that opportunity, and at the same time whilst the wholesale market has such an insatiable appetite for AAA notes, we can give it to them.”

He said Shawbrook Bank had an “absolute desire” to complete further securitisations, and suggested that “you can expect to see a couple a year from here on in”.

Minto said the bank was “really excited” about the BTL and first charge complex markets that TML operated in.

He said: “There is an emerging mega trend in in the post-Covid world whereby you have lots of borrowers who, by sheer bad luck, whose incomes have been impacted by the pandemic.

“It’s through no fault of their own that they work in hospitality or hotels and restaurants, and they will find themselves in a difficult position, whether it is because they took payment holidays or got into arrears on their mortgage, or on their borrowings.”

Minto said that as banks applied “straightforward credit underwriting scorecards” people impacted may not be able to access the main mortgage market.

He added: “We want to expand our range of first charge complex to the most pandemic-affected individuals because it’s a huge market that won’t be well served by the big banks and we can really provide proposition and product into those markets to help people.”


Securitisation demand

Minto said that last year, the securitisation market was “choppier” from April to around July and “not very active”.

He said the pandemic didn’t impede Shawbrook however, as it had access to retail deposits, and the “sheer amount of flow in the retail deposit market was phenomenal”.

“There was a point last year where we were carrying £2.5bn of cash on a balance sheet of £8bn. It was so liquid out there,” he added.

He said that with regards to TML and Bluestone Mortgages, which it is a funding partner of, Shawbrook told the lenders at the height of the pandemic to “get out there and support more borrowers… because others can’t or won’t at that point in time”.

Minto said he also expected the securitisation market to pick up in the near future.

He said: “Those that are wholly reliant on wholesale markets, the non-bank lenders, should now start to be able to position their assets and go to the wholesale securitisation markets. They have got equally good assets, and it’s right for them to now come to market a little bit more activity.”

Minto said: “The well-established players who’ve got banks behind them… they’re seeing in the last year a collapse in the cost of retail deposits and that is giving fuel to be able to access these markets. Pricing is attractive to us, but it is under some competitive tension, so the borrower is getting a better deal today than he or she was yesterday.”

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