Introductory guide to loan portfolio sales

Published by a ��Ƶ Banking & Finance expert

Practice notes

Introductory guide to loan portfolio sales

Published by a ��Ƶ Banking & Finance expert

Practice notes

This Practice Note provides an introduction to loan portfolio sales, considering in particular the types of portfolios that exist for sale and the identities and motivations of typical sellers and buyers. It also describes a typical portfolio sale process.

For information on the key issues which may arise on loan portfolio sales, see Practice Note: Loan portfolio sales—key issues and for information on the main legal documentation used, see Practice Note: Loan Portfolio Sales—legal documentation.

What is a portfolio sale?

A loan portfolio sale is the disposal by a lender of a group of Loans, rather than a single loan (as might be undertaken in a trade on the Secondary loan market). The selling lender may have been involved in origination or initial Syndication of the relevant loans, or acquired them on the secondary loan market from other Investors.

Portfolio sales gained prominence following the global financial crisis in 2008, (see 'Motivations of sellers' below). Many regulated lenders needed to de-leverage their balance sheet and improve regulatory capital ratios owing to political and regulatory

Jurisdiction(s):

United Kingdom

Key definition:

Loans definition

What does Loans mean?

occupational pension scheme resources may not at any time be invested in an employer-related loan. In accordance with section 40 of the Pensions Act 1995, employer-related loans are: loans to the employer or any such person; shares or other securities issued by the employer or by any person who is connected with, or an associate of, the employer; or employer-related investments eg a guarantee or security for obligations of the employer. This does not apply in respect of small self-administered schemes (SSASs) and self-invested pension plans (SIPPs).

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