Barclays PLC intends to securitize and sell on the Irish residential mortgage portfolio that it agreed to buy from Lloyds Banking Group PLC for roughly £4 billion, Reuters reported May 18.
Barclays intends to complete the purchase and securitization process in the next two months and then sell the assets to a group of investors, including Prudential PLC unit M&G Investments, according to the report.
The transaction, which will mark Barclays' second mortgage securitization of such large scale after a consortium led by unit Barclays Bank PLC agreed in April to acquire two separate portfolios of Bradford & Bingley Plc buy-to-let and residential owner-occupied mortgages for a total of £5.3 billion, comes as European banks are continuing to reduce their balance sheets to comply with tougher capital regulations, Reuters noted.
"This kind of deal shows the continued deleveraging of financial institutions in Europe that has taken place since 2011, and the investor appetite for good-quality residential mortgages," said Cecile Hillary, head of Barclays' asset finance business.
Lloyds earlier said the deal will generate about 25 basis points of common equity Tier 1 capital upon completion.
The portfolio comprises some 27,000 mortgages, most of which were originated in Dublin between 2004 and 2010, according to Reuters.
