JPMorgan Said Mulling $18 Billion Loans Bid to Rival Goldman

  • U.K. government to sell mortgages in Granite portfolio
  • Blackstone, Och-Ziff and Banco de Sabadell also interested

JPMorgan Chase & Co. is preparing to bid for about 12 billion pounds ($18 billion) of mortgages being sold by the U.K. government, according to five people with knowledge of the matter.

The bank intends to bid for a mortgage book being offered by U.K. Asset Resolution Ltd., which manages lenders that were nationalized during the financial crisis, said the people, who asked not to be identified because the talks are private. CarVal Investors LLC will be a partner in the bid, one of the people said.

The planned bid steps up competition in an auction that has already drawn interest from Goldman Sachs Group Inc., Blackstone Group LP, Och-Ziff Capital Management Group LLC and Banco de Sabadell SA. Chancellor of the Exchequer George Osborne intends to sell the mortgages, which are the collateral backing a securitization vehicle called Granite, to help pay down the national debt.

“Plenty of non-core or underperforming loan pools are traded these days, but Granite is prime U.K. mortgage assets and an opportunity to buy those does not come around often,” said Ben Hayward, a London-based money manager at TwentyFour Asset Management, which oversees 4.9 billion pounds. “Investors are interested in Granite because these are mortgages that are well known, with a resilient track record and being offered in size.”

Officials for JPMorgan, CarVal and UKAR declined to comment on a possible bid.

Groups Bid

Goldman Sachs, Blackstone, Och-Ziff and private-equity firm TPG Capital have formed a group to bid for the loans, people with knowledge of the matter said in June. Banco Sabadell, which bought TSB Banking Group Plc earlier this year, is assessing the portfolio, a person familiar said last month. Royal Bank of Scotland Group Plc is considering a bid, according to Sky News.

JPMorgan last year led a group that acquired 2.7 billion pounds of mortgages from Bingley, England-based UKAR. The U.S. bank subsequently packaged the loans into tradeable bonds.

The sale of the Granite portfolio will be completed in the second quarter of 2016 at the earliest, UKAR Chief Executive Officer Richard Banks said in June. Credit Suisse Group AG is managing the sale.

Northern Rock Plc funded almost 50 billion pounds of U.K. mortgages through Granite before almost collapsing seven years ago. The government nationalized the lender following the U.K.’s first bank run in 140 years.

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