Pride Comes Before A Fall…Ulster Bank….

It appears at least one of Ulster Bank’s Securitisation Tranches, namely, “Celtic Residential Irish Mortgage No.11 plc” is in deep trouble.

Just to remind everyone, “Celtic Residential Irish Mortgage No.11 plc” contains:

15,850 Irish Residential Mortgages according to the document below, the original Prospectus contained 22,568 Morgages with a total value of €4,079,874,619.00

According to the Notice below the current Noteholder’s of these mortgages appear not to be very happy with the performance of their investment and more so, because the credit rating of the tranche has dropped below what is acceptable in the Sale of Mortgages agreement contained in the term & conditions of the securitisation.

As a result, the Noteholder’s want to “perfect” their claim over the actual mortgages, obviously because they have lost confidence in Ulster Bank, (surprise, surprise!)

The Issuer has raised a serious concern with “perfecting” the Noteholder’s claim, the excuse used, as you will read is, that in order to perfect the claim, the Mortgagor has to be notified!

Read closely the reasons the Issuer, who, by the way is Celtic Residential Irish Mortgage Securitisation No.11 plc which is, an entity created by Ulster Bank, it does not want the Mortgagor to be notified.

The Trustee, and the Paying Agent both of whom are arms of the Deutsche Bank organisation have not made their feelings known on the matter although, it is pretty obvious that they will probably  close ranks with their banking buddies Ulster against the Noteholder’s, but in this case the Noteholder could push the issue legally as the Sale of Mortgages element of his agreement provides for this perfection when the credit rating of the security falls below a certain level, which it has.

Anyway, have a good read and in closing I have one last observation, this development, if nothing else sheds a very clear picture, or snapshot of how the Ulster Bank and RBS it’s parent viewed themselves at the height of the boom, they obviously never foresaw a time when the credit rating of the securities would cause a problem and that leads me to quote the old adage:

“Pride Comes Before A Fall”


I have highlighted the elements of this document I believe to be of greater importance

Celtic Resdntl 11

Notice to Noteholders

RNS Number : 8350V
Celtic Resdntl Irish Mtge Secs11PLC
17 January 2013




(incorporated with limited liability in Ireland with registration number 429348)

Notice of meetings to the holders of

€385,000,000 Class A2a Mortgage Backed Floating Rate Notes due 2048

(ISIN: XS02757905I6)

$328,000,000 Class A2b Mortgage Backed floating Rate Notes due 2048

(ISIN: XS0275790607)

€1,388,800,000 Class A3a Mortgage Backed Floating Rate Notes due 2048

(ISIN: XS0275790789)

£586,000,000 Class A3c Mortgage Backed Floating Rate Notes due 2048

(ISIN: XS0275790862)

€77,000,000 Class Ba Mortgage Backed Floating Rate Notes due 2048

(ISIN: XS0275790946)

€147,400,000 Class Ca Mortgage Backed Floating Rate Notes due 2048

(ISIN: XS0275791084)

£17,500,000 Class Cc Mortgage Backed Floating Rate Notes due 2048

(ISIN: XS0275791167)


(the “Notes”)


REFERENCE is made to the mortgage sale agreement dated 12 December 2006 (the “Mortgage Sale Agreement”) between Celtic Residential Irish Mortgage Securitisation No. 11 p.l.c. (the “Company”), Ulster Bank Ireland Limited (“Ulster Bank”) as seller of the mortgages and Deutsche Trustee Company Limited as security trustee (the “Security Trustee”).

Capitalised terms used but not otherwise defined in this notice shall have the meanings ascribed to them in the Terms and Conditions of the Notes set out in the Trust Deed entered into between the Issuer and Deutsche Trustee Company Limited as note trustee (the “Note Trustee”) on 12 December 2006 (the “Trust Deed”) and the master definitions and interpretations agreement dated 12 December 2006 between, among others, the Security Trustee, the Note Trustee and the Issuer.

NOTICE IS HEREBY GIVEN by the Company that Ulster Bank ceased to maintain a rating on its long-term unsecured, unsubordinated, unguaranteed debt obligations (“Long-term Ratings”) equal to or greater than A3 by Moody’s Investors Service, Inc. (“Moody’s”) on 11 October 2011 following a downgrade of its Long-term Rating by Moody’s on that date (the “Moody’s Downgrade”). On 7 October 2011, Moody’s lowered its Long-term Ratings on The Royal Bank of Scotland plc (“RBS plc“) to ‘A2’ (Outlook negative) from ‘Aa3’. On 11 October 2011, Moody’s downgraded Ulster Bank to Baa1 / P-2 (Outlook negative) from A2 / P-1. On 21 June 2012, Moody’s further downgraded Ulster Bank to Baa2 / P-2 (Outlook negative). This follows the downgrade of the ratings of its parent, RBS plc, to A3/P-2 from A2/P-1 which was done in the context of Moody’s industry wide review affecting 114 financial institutions (counted by group) in 16 European countries. There was expressly no impact on Ulster Bank’s standalone rating.  Moody’s review noted that the negative outlook “continues to reflect the significant uncertainty about the speed and magnitude of further asset quality deterioration on Ulster Bank’s asset quality”.

Moody’s stated that the current rating is “based on Moody’s assessment that Ulster Bank Group is a core subsidiary of Royal Bank of Scotland Group (RBS Group) and is likely to remain so” and that “Ulster Bank Group (the consolidated entity) is an integral part of RBS Group’s strategy and this has been evidenced by the ongoing high levels of support through the provision of capital and funding support”.

The terms of the Mortgage Sale Agreement state that the equitable sale of mortgages listed in the Mortgage Sale Agreement shall be perfected, at the direction of the Security Trustee, if Ulster Bank ceases “to maintain ratings on its long term unsecured, unsubordinated, unguaranteed debt obligations equal to or greater than A- by S&P, A- by Fitch or A3 by Moody’s (or the equivalent rating from the same rating agencies)” (“Perfection”).

There are, however, many factors that are relevant to, and should inform, any decision to be made with regard to Perfection. In particular the Company highlights the following factors due to what the Company regards as their potential adverse consequences to Noteholders.

The Issuer’s view of risks associated with proceeding to Perfection

There is strong negative sentiment among a large section of the public in Ireland arising from the economic downturn, banking crisis and house price collapse.

In this context, the process of perfecting assignment of mortgages to a securitisation vehicle which issued bonds secured over individual borrower residential mortgages, and notifying borrowers of such transfer of ownership of Mortgages to the Company, gives rise to concerns that the Perfection could have a material adverse effect on the timing and/or amount of collections made under the Loans in the Loan Pool.

Borrowers may be less inclined to repay their Loans once they are formally notified in writing that their Mortgage is now owned by a special purpose vehicle in a securitisation (which entities and labels, unfairly or not, hold significant negative connotations for much of the public at the present time). The serving of such notices on all 15,850 mortgage borrowers concerned is also likely to generate unfavourable media attention and comment. This could materially impact both the timing and amount of collections on the Mortgages, a situation that would be prejudicial to Noteholders.

Even if the Perfection process were to be approved pursuant to an Extraordinary Resolution, there is a significant likelihood that it would take several years for the Perfection to be completed, with the strong possibility that the process itself could have a negative impact on the timing and amount of collections under the Mortgages. Furthermore, new collection accounts would need to be established in the name of the Issuer which would entail the redirection of borrower direct debits in favour of the Issuer. Such a process could involve notifying borrowers of the change which may consequently cause confusion and have a negative impact on the timing and amount of mortgage collections. To the best of the Company’s knowledge, no such comparable bulk transfer of mortgages in a securitisation or otherwise, involving the individual re-registration of approximately 15,850 mortgages, has to date been undertaken in Ireland, and there is some concern that an exercise of this nature could present a significant challenge within the existing system.

While the Issuer is of the opinion that Perfection would be materially prejudicial to the interest of the Noteholders (due to the reasons set out above) it acknowledges that these are the Issuer’s views and not those of the Security Trustee, Note Trustee or Principal Paying Agent.

The Note Trustee’s position on directing the Security Trustee to proceed with Perfection

Following separate meetings of the holders of the Notes of each Class of Notes held on 8 September 2011 relating to Perfection (as detailed in the notices to Noteholders dated 17 August 2011 and 12 September 2011), which did not approve the proposed Extraordinary Resolution to proceed with Perfection, the Security Trustee did not proceed with Perfection.

The Note Trustee does not at this time (given the outcome of the previous Noteholder meetings held on 8 September 2011) intend to once again convene separate meetings of the holders of the Notes of each Class of Notes to consider directing the Security Trustee to exercise its discretion in relation to Perfection unless the Note Trustee is requested to do so in writing (in accordance with and subject to the provisions of the Trust Deed) by Noteholders holding not less than one-tenth of the aggregate principal amount of the Notes of each Class of Notes for the time being outstanding.

Noteholders wishing to discuss any concerns relating to this matter (whether or not they hold sufficient Notes to entitle them to convene a meeting of Noteholders), or to discuss convening a meeting of Noteholders, may contact the Note Trustee by email at: or

Should any Noteholder or Noteholders (regardless of the size of their holding) wish to discuss the merits (or otherwise) of Perfection with other Noteholders and/or representatives of Ulster Bank, the Note Trustee will be happy to facilitate such discussions. Such Noteholders should contact the Note Trustee (by e-mail as above) at the earliest time, and in any event by Friday 15th February 2013. Nothing herein shall prevent Noteholders from directing the Issuer and the Note Trustee (in accordance with, and subject to, the provisions of the Trust Deed) to undertake the Perfection in the future should they deem that it would be in their interests to do so.

Neither the Security Trustee, the Note Trustee nor the Issuer have verified the impact of Perfection on any of the Transaction Documents, the Notes or otherwise and Noteholders should therefore undertake their own assessment of the consequences that Perfection may have on the Transaction Documents and the Notes.

This Notice is given by:

Celtic Residential Irish Mortgage Securitisation No. 11 p.l.c.

5 Harbourmaster Place

International Financial Services Centre

Dublin 1


Dated: 17 January 2013


This announcement has been issued through the Companies Announcement Service of

The Irish Stock Exchange.



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