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“We are paying a 9% coupon on our lower tier 2 debt so why would we sell our equity pieces for 10% to 12%?” |
If imitation is the sincerest form of flattery, the brains behind Kensington Mortgages must be having trouble keeping their egos in check. The UK non-conforming mortgage lender pioneered the capital markets-funded monoline business model – a model that is now being increasingly adopted in the UK and continental Europe. Established by ex-Goldman Sachs’ securitization supremo Martin Finegold in 1995, Kensington (now under the stewardship of its ex-Abbey CEO, John Maltby) grew its assets under management by 38% to £5.7 billion ($10.2 billion) in 2005. In November 2000 it was the first non-conforming lender to be listed and wrote the blueprint for non-conforming and sub-prime mortgage origination in the UK. And Kensington is still regarded as the blue-chip lender in this market a full decade later.
Securitization is the foundation of Kensington’s capital markets activity: the firm now has three active securitization programmes and issued £2.55 billion of bonds via four deals in 2005.
