September 25, 2015 / 3:22 PM / 5 years ago

Co-Op Bank offloads $2.5 billion non-core mortgage assets

LONDON, Sept 25 (Reuters) - Britain’s Co-operative Bank has offloaded 1.65 billion pounds ($2.5 billion) of risky home loans through a second securitisation of its Optimum residential mortgage portfolio, it said on Friday.

The Optimum loan book, worth 6 billion pounds, comprised buy-to-let, self certification and subprime mortgages, which require the bank to set aside more capital than other home loans.

The deal means that Co-op Bank, which fell under the control of U.S. hedge funds in 2013 after a 1.5 billion pound capital shortfall was exposed, has now securitised more than half the portfolio over the past six months. It sold a portfolio of 1.5 billion pounds of Optimum loans in May this year.

“The successful completion of this transaction further demonstrates the steady and real progress we are making in meeting our commitments by delivering our plan to reduce our risk weighted assets to build the bank’s capital resilience under stress,” said Co-op Bank’s Chief Executive Niall Booker.

Co-op Bank was the only British bank to fail a stress test by the financial regulator last year.

Warwick Finance Two has issued rated retail mortgage-backed securities (RMBS) and residual certificates to investors backed by the portfolio. ($1 = 0.6585 pounds) (Reporting by Matt Scuffham, editing by Sinead Cruise)

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