Allen & Overy (A&O) has landed a trophy finance role advising Lloyds TSB on its first securitisation with a £7.02bn issue backed by residential mortgages belonging to subsidiary Cheltenham & Gloucester.

The instruction, the largest residential mortgage-backed securitisation (RMBS) yet in the UK, was secured after a competitive pitch earlier this year and comes as Europe's main lenders rush to refinance their mortgage portfolios.

A&O's team was led by new securitisation head Salim Nathoo, with the firm also deploying US securities partner Christopher Bernard, London tax partner Mark Brailsford, US tax partners Jack Heinberg and Henry Morgenbesser, real estate partner Daniel McKimm and derivatives partner Richard Tredgett.

The mandate adds to a string of similar deals for A&O, with the firm advising on multi-billion pound financings for Royal Bank of Scotland, Northern Rock and HBOS. RMBS is a financing tactic that has been rapidly adopted by UK clearing banks in recent years.

Despite being included on Lloyds' new-look panel earlier this year, the deal marks A&O's first securitisation mandate for the bank.

The financing generated roles for a string of other firms with Clifford Chance securities partner Christopher Walsh advising lead arrangers Citibank, Lloyds TSB and Lehman Brothers, while Shepherd & Wedder-burn was instructed on Scots law.

Mourant du Feu & Jeune capital markets partner Jonathan Rigby provided Jersey law advice for Lloyds and Dundas & Wilson banking partner Stephen Philips advised Lloyds on Scots law.

The so-called delinked financing, structured through a master trust that holds the securitised mortgages, allows the bank to issue short-term notes not directly tied to mortgages in the portfolio.

Nathoo told Legal Week: "New players have entered into the market driven by cheap funding costs and expanding the sources of their funding, which is presenting exciting opportunities."

Legalweek.com (17 November).