TSB Covered Bonds LLP and related entities expected to be used in the structure of a covered bond programme were incorporated yesterday (Monday), and a spokesperson for the UK bank told The CBR that covered bonds are part of its long term funding diversification plan.

TSB Covered Bonds LLP, TSB Covered Bonds (Holdings) Ltd and TSB Covered Bonds (LM) Ltd were incorporated, with the entities corresponding with those typically used by UK financial institutions in their covered bond structures.

The TSB spokesperson told The Covered Bond Report that covered bonds form part of its long term funding diversification plan.

TSB was taken over by Spain’s Sabadell Group in June 2015. Lloyds Banking Group divested the bank under European Commission state aid rules with a listing in 2014, with branches carved out to create the TSB entity (Lloyds having taken over the TSB Group in 1995).

The bank in November completed a residential mortgage-backed securitisation (RMBS), Duncan Funding 2015-1 plc for £537m (Eu682m). A second Duncan Funding transaction is underway.

The bank’s gross mortgage lending was £4.83bn in 2015 and it had total assets of £31.6bn at the end of 2015.

TSB last November agreed to acquire £3.3bn of former Northern Rock mortgages and loans from Cerberus Capital Management, which in turn acquired them from UK Asset Resolution.