French owned CCF Charterhouse has boosted its firepower in the UK by more than £100m as part of a long- term plan to triple its property lending capacity.
The bank launched its first securitisation last week with a £108m bond backed by a package of 40 commercial property loans. Charterhouse will use money raised from the bond to advance more loans.
The move has scotched speculation that the bank was looking to sell its loan book and quit property lending.
Charterhouse is the second bank to recycle a portfolio of loans in the capital markets in the past two months.
In August, US investment bank Morgan Stanley successfully launched its first £169m debt-backed bond.
Morgan Stanley has a second £350m issue pencilled in for later this month as it tries to build up a substantial lending operation.
This form of financing is established in the US, where the commercial mortgage-backed securities (CMBS) market is worth billions of dollars.
But Andrew Moffat, head of property finance at Charterhouse, said his bank is using debt securitisation to meet a short-term demand from borrowers, and is not trying to build a CMBS business to compete with its US rival.
Charterhouse is close to its own internal limits on the amount of money it can lend on commercial property. Securitising a proportion of the debt effectively allows the bank to hive off some of the risk.
Moffat said: “The securitisation is only part of our expansion strategy. We have long operated prudent limits within Charterhouse, and the exercise will allow this expansion while managing our overall exposure to property.”
The bank has also added three recruits to its eight-strong lending team. Charterhouse generally makes loans of £1m-10m on investment deals and development projects.
Overall bank lending on property has been rising steadily since 1996 and has topped £40bn this year.
