Permanent TSB lines up Cerberus for UK buy-to-let sale - sources

By Mariana Ionova

LONDON, Oct (HKSE: 3366-OL.HK - news) 4 (IFR) - Ireland (Other OTC: IRLD - news) 's Permanent TSB (EUREX: 27526365.EX - news) is nearing an agreement to sell the remainder of its Capital Home Loans mortgage portfolio to Cerberus Capital Management, according to three people with knowledge of the situation.

The US private equity group is understood to have been selected as a preferred bidder for the UK portfolio, the people said. The mostly buy-to-let mortgage book totals about £2.5bn.

While the sale is not yet finalised, Cerberus is understood to have emerged as a frontrunner for the portfolio, which PTSB is trying to sell as part of a wider deleveraging effort.

In March 2015, Cerberus bought the other half of the CHL (BSE: CHLLTD.BO - news) 's assets, which totalled £2.5bn. The group also bought the legal CHL entity as part of the transaction.

PTSB was originally aiming to shed the rest of the book by mid-2016 under the terms of a deleveraging programme agreed with the European Commission.

However, in its half-year 2016 statement, the lender said the timing of the sale was "uncertain due to UK's EU referendum outcome" and it was engaging with the authorities "in relation to its Restructuring Plan Commitments".

PTSB declined to comment. Cerberus did not immediately respond to a request for comment.

Last year, Cerberus also purchased some £13bn in Northern Rock mortgages from the UK government, securitising the bulk of them earlier this year.

The group is also in the process of securitising a part of the CHL mortgages it purchased last year. (Reporting by Mariana Ionova, editing by Robert Smith)