Bank funding: HBOS keeps its options open

Robert Plehn, HBOS: satisfying his capital needs with cheaper sources

HBOS has incorporated a 2008 call option into the pre-placed mezzanine tranches of its latest Permanent RMBS transaction, which could be an indication of the largest UK mortgage originator’s issuance plans post-Basle II: a possible cessation of sub-triple-A RMBS issuance. “The cost of getting capital relief from the issuance of sub-triple-A paper for a prime residential mortgage portfolio is relatively expensive for us,” says Robert Plehn, head of securitization and covered bonds at HBOS Treasury Services in London.