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Northern Rock and JC Flowers circle BTL lender CHL

Northern Rock plc and JC Flowers are considering bids for buy-to-let lender Capital Home Loans, Money Marketing understands.

CHL withdrew from new lending in March 2008 and has stated several times it wants to re-enter the market in the future. As of December 2010, CHL had £6.5bn of assets under management.

In March, Irish Life & Permanent, the Ireland-based parent of CHL, was ordered to raise €4bn by the Irish central bank to cover potential losses from homeloans following stress tests of the country’s banks.

It is understood that Northern Rock, which was nationalised in February 2008, is able to acquire businesses despite being owned by taxpayers, before its eventual return to the private sector.

In January 2010, the state-backed bank was split into a “good bank”, Northern Rock plc, and Northern Rock Asset Management, which contains the more toxic loans from the bank’s mortgage book. Last month, the Government put Northern Rock plc up for sale.

US private equity firm JC Flowers invested £50m into Kent Reliance Building Society in July last year.

In December 2010, Norwich & Peterborough Building Society rejected JC Flowers’ approach to buy a stake in N&P.

Northern Rock and JC Flowers refused to comment.

Irish Life & Permanent and CHL were not available for comment on the matter.

Emba group sales and marketing director Mike Fitzgerald says: “CHL has worked hard to get its book in pristine condition, so if Northern Rock gets hold of it, it has done well.”

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