The deal, Lovelace CBP 01, was backed by buy-to-let (BTL) mortgages secured on residential and commercial properties. The transaction has enabled Cynergy Bank to secure capital relief while serving its core customer base of professional landlords.
Derecognition involves removing financial assets from a company’s balance sheets.
The lender said the transaction comprised two innovations that were uncommon in the market, the first being a mechanism to ensure lending to customer groups that were either fully in or out of the transaction. This was to avoid customers being across two balance sheets.
The second feature was a two-year replenishment period, and in that time, Cynergy Bank can sell further lending to customer groups already in the pool.
The lender said these innovations reflected its mortgage offering, which mainly includes short-term amortising loans of 2-5 years, secured across a landlord’s entire portfolio.
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Cynergy Bank also offers customers product switches or refinance options when their product ends.
The lender said the innovations allowed the bank to structure a securitisation that derecognised loans for capital purposes, while supporting existing borrowers.
Lloyds Bank Corporate Markets acted as arranger on the transaction.
Nicholas Fuller, director of group treasury at Cynergy Bank, said: “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, and the special purpose vehicles (SPVs) will be named after UK innovators, with Ada Lovelace, pioneer of mathematics and computing, being the first.
These deals will allow Cynergy Bank to fund continued growth capital, the book has expanded from around £1.5bn in 2018 to £4.5bn in 2025.
