LONDON (Reuters) - Investment manager Venn Partners has bought residential mortgages worth 500 million euros (413 million pounds) from Dutch lender GE Artesia Bank, the company said on Monday, as it seeks to set up a securitisation arm in the Netherlands.
Venn, which began real estate lending in 2013 under former Citigroup managing director Paul House, said it would also begin issuing mortgages through a new lending platform called Ember in order to feed the securitisation vehicle.
Venn's purchase from GE Artesia will provide the first tranche, with Venn targeting 500 million euros of securitised mortgages a year, said Jonathan Clayton, managing partner at the firm.
"We think there is an interesting dynamic in the Dutch market," Clayton said, adding that the new vehicle would be the first home mortgage securitiser to be launched in the Netherlands since the financial crisis.
The new mortgages will be issued through brokers and independent financial advisers (IFAs), Clayton said.
Securitisation allows institutions to pool mortgages that are then sold off in smaller chunks to investors.
The practice is used to provide money for a whole range of activities, including mortgages, car loans and finance for business, but came under fire after securitised products based on U.S. home loans turned sour in 2007, triggering a chain of events that led to the global financial crisis.
The market has shrunk dramatically since then, with securitisation in Europe dropping from $1.2 trillion (721.8 billion pounds) in 2008 to $322 billion in 2012, according to Bank of England figures.
In the Netherlands, the residential lending market is shifting as the government winds down a mortgage guarantee scheme that accounted for four-fifths of new mortgages last year.
Venn is targeting the gap left by the scheme's gradual phasing out, and the reluctance of European banks to lend as they attempt to shore up their balance sheets ahead of stress tests this year.
Its purchase allows the 150-year-old Artesia Bank, a subsidiary of General Electric
"This sale is consistent with our strategy of refocusing on our trade finance and working capital solutions," a spokesman said.
(Reporting by Freya Berry; additional reporting by Clare Hutchison; editing by Tom Pfeiffer)