Fitch Affirms Paratus' UK Primary and Special Servicer Ratings.
OREANDA-NEWS. Fitch Ratings has affirmed Paratus AMC Limited's (Paratus) Servicer Ratings as follows:
UK Residential Primary (Prime) Servicer Rating affirmed at 'RPS2'
UK Residential Primary (Sub-prime) Servicer Rating affirmed at 'RPS2'
UK Residential Special Servicer Rating affirmed at 'RSS2+'
Paratus has successfully diversified its business streams in the last 12 months, which, in Fitch's view, improves the servicer's sustainability in the medium-term. It has acquired a majority stake in a peer-to-peer lender and is originating buy-to-let mortgages under its own lender brand, although origination volumes in 2015 were low. The shareholders of Paratus have demonstrated their support of the group's new corporate plan by providing the funding line.
The senior management team (SMT) has been expanded, with the addition of two external hires to support the growth and lead the strategic development of Paratus. The experienced new Chief Technology Officer and Commercial Director had been appointed for no more than six months at the time of review. However, Paratus' SMT is overall stable with its average industry tenure in line with rated peers.
Paratus has now fully migrated the entire servicing portfolio from JADE to the Phoebus loan accounting system, including over 150,000 redeemed loans. This provides Paratus with further flexibility in its primary servicing activities. Despite the improving primary servicing systems, call performance statistics have deteriorated year-on-year.
The ratings take into account Paratus' continued focus on individual borrower circumstances and affordability when assessing the suitability of resolutions methods. Over 2015, a third of loans in arrears at the beginning of the period have returned to being fully performing. Staff members across teams continue to demonstrate sound levels of experience compared with peers. The servicer continues to enhance its robust FAMS servicing system, and other in-house applications, to increase automation.
The ratings also reflect Paratus' continued focus on an already robust staff development programme. The average number of training hours delivered to new staff increased to 221 hours in 2015 from 183 hours in 2014. The average number of training hours delivered has continued to increase year-on-year and compares well with peers. The number of internally provided training modules has increased by a third and a structured training programme has been developed for new senior managers.
At end-December 2015, Paratus' servicing portfolio consisted of 26,158 loans (December 2014: 27,878) with an outstanding principal balance of GBP2.6bn (GBP2.8bn). The securitised portfolio includes 22 transactions, representing 99% of the total primary servicing portfolio by value.
Fitch employed its global servicer rating criteria in analysing the servicer's operations and financial condition, with the criteria including a comparison of similar UK servicers as part of the review process.