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Charter Court agrees to sell its interest in mortgage securitisation

Tom Belger | 07:30 Wednesday 17th January 2018

Charter Court Financial Services Group PLC has agreed to sell its entire economic interest in the Charter Mortgage Funding 2017-1 PLC securitisation (CMF 2017-1) for £265m.

CMF 2017-1 was issued on 27th July 2017 and securitised around £297m of prime residential mortgages originated by Charter Court Financial Services Limited.

The group has agreed to sell the securitisation to Merrill Lynch International (BofAML) and is expected to generate a pre-tax gain of £15m.

The transaction will also result in a reduction in the gross assets of the group of around £293m and a reduction in risk-weighted assets currently attributed to the securitised mortgages of close to £97m.

The associated increase in common equity tier 1 capital ratio through the reduction in risk-weighted assets and the one-off gain will be reinvested to support new loan originations in Charter Court's specialist lending segments.

Charter Court also announced that as of 31st December 2017, the group's loan book stood at £5.4bn with new loan originations in the year amounting to £2.7bn.

"This has been an excellent transaction for Charter Court, which demonstrates the investor confidence in the quality of our underwriting processes, underpinned by our track record of growing our loan book without sacrificing asset quality,” said Ian Lonergan, CEO of Charter Court (pictured above).

“I am also pleased with the delivery of strong net loan book growth and originations in 2017 as we continue our journey post-IPO.

“We look forward to presenting the full-year results and broader business performance in March.”

Sebastien Maloney, CFO of Charter Court, added that the transaction demonstrated its proactive approach to asset-liability and capital management, along with its ability to execute capital market transactions.

“The group also recently closed a funding line with an affiliate of BofAML, which will further increase funding diversity through 2018 and beyond.

“I would also like to take this opportunity to note the recent changes to the standardised approach to credit risk introduced by Basel III regulations and affirm that we expect the impact of these to be broadly neutral for Charter Court."

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