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Oak No. 3 Plc: 15 September 2019

The third in the Oak series of RMBS deals, where the Issuer will make payments on the notes from payments of principal and revenue received from a portfolio comprising mortgage loans originated by Aldermore Bank plc and secured over residential properties located in England and Wales, which will be purchased by the issuer on the closing date.

Aldermore was established in May 2009 through the acquisition of Ruffler Bank plc, a specialist bank offering straightforward products to its customers. As at 30 June 2018, loans to customers stood at £9.0bn, customer deposits totalled £7.8bn and the CET1 capital ratio was 12.3%. Aldermore generated an underlying profit before tax for 18 months to 30 June 2018 of £232m and an underlying return on equity of 17.2%. In March 2018 Aldermore became part of the FirstRand Group, one of South Africa’s largest financial services institutions.

The provisional portfolio will consist of 2,708 loans originated by the seller between June 2010 and June 2019 and secured over properties located in England and Wales. The current average loan size is £142,614 and the largest outstanding loan is for £996,654. Use of Proceeds (by current balances): Purchase – 55.37%, re-mortgage 44.63%. Repayment Terms: Repayment – 89.66%, Interest Only – 10.34%. Product Types: Fixed rate loan with compulsory future switch to floating – 95.90%, Floating – 4.10%, Discount – 0.17%. The WA current LTV is 70.30% (original 72.16%) and the WA seasoning is 13.83 months. Regional concentration (by current balances): South East – 17.91%, North West – 14.55%, East Anglia – 13.38%, East Midlands – 10.04% and the West Midlands – 9.20%.

Significant investor: Aldermore will on the Closing Date purchase 100% of the issued amount of the Class Z VFN. A related entity of Aldermore may on the Closing Date take a portion of the Class A Notes.

EU Risk Retention: Aldermore will undertake that it will retain a material net economic interest of at least 5% in the securitisation (for the life of the transaction) in accordance with Article 6 of the Securitisation Regulation. As at the Closing Date such interest will be comprised of an interest in the first loss tranche, in this case the Class Z VFN, as described by the text of Article 6(3) of the Securitisation Regulation.

US Risk Retention: The Seller, as the sponsor under the U.S. Risk Retention Rules, does not intend to retain at least 5% of the credit risk of the securitised assets for purposes of compliance with the final rules promulgated under Section 15G of the Securities Exchange Act of 1934, but rather intends to rely on an exemption provided for in Section 20 of the U.S. Risk Retention Rules regarding non-U.S. transactions.

STS: The transaction is intended to qualify as an STS securitisation within the meaning of Article 18 of the Regulation (EU) 2017/2402.

Compare/contrast: Oak No.2, Hawksmoor Mortgages 2019-1 plc, Silk Road Finance No.5 plc