BofA, Credit Suisse Said Backing Cerberus's U.K. Loan Purchase

Bank of America Corp. and Credit Suisse Group AG are among firms planning to provide finance to back Cerberus Capital Management’s 11.7 billion-pound ($18 billion) acquisition of U.K. mortgages, according to people with knowledge of the matter.

Cerberus was selected as the preferred bidder for the mortgages being offloaded by the U.K. government, four people with knowledge of the matter said on Friday. Bank of America, Credit Suisse, Lloyds Banking Group Plc, Morgan Stanley and Natixis SA are in discussions to help finance the deal, according to people familiar with the matter on Thursday, who asked not to be identified because the talks are private.

U.K. Chancellor of the Exchequer George Osborne plans to sell the mortgages to help pay down the national debt. The loans were made by failed Northern Rock Plc, which funded almost 50 billion pounds of U.K. mortgages through a series of securitizations known as Granite before being nationalized seven years ago.

The sale has attracted interest from some of the biggest banks and investment firms, with lenders seeking to earn fees from providing financing to private-equity buyers and by arranging asset-backed bonds. JPMorgan Chase & Co., Deutsche Bank AG and Citigroup Inc. were among firms that bid for the assets, which were packaged into the Granite securitization vehicle, separate people familiar with the matter said earlier this month.

Officials at Bank of America, Credit Suisse, Lloyds and Morgan Stanley declined to comment on their involvement. A spokesman for Cerberus declined to comment on the private-equity firm’s financiers. A spokeswoman for Natixis wasn’t immediately available to comment.

Credit Suisse is also advising the U.K. government on its asset sales. It was hired last year by U.K. Asset Resolution Ltd., which manages lenders that were nationalized during the financial crisis.

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