Bank of Ireland sells UK personal loans book
GoldenTree Asset Management is the buyer of an €800m book of UK consumer loans Bank of Ireland said it was selling when it reported interim results last week, according to the Bloomberg news agency.
The unsecured personal loans are performing and in most cases likely to have originated under the bank’s former joint venture with the UK post office, which ended for new mortgages and loans at the start of this year.
The bank ended another lending joint venture with the AA at the end of last year.
The loan sale transaction is not liked to Bank of Ireland’s Northridge UK motor finance arm. Last week, Bank of Ireland hit pause on its €3bn UK motor finance arm, pending greater regulatory clarity around the sector.
Northridge provides car finance via forecourt-based brokers.
US investor GoldenTree is emerging as a buyer of assets from European lenders, including buying a book of Italian mortgages from Barclays this year. Citigroup is arranging financing for the latest deal through a securitisation using the Bank of Ireland loans as collateral, Bloomberg said, citing sources who asked not be identified because the matter is private.
The asset-backed deal will be carved into varying portions, the sources said. GoldenTree’s managed funds intend to buy the junior part while Citigroup will arrange the rest of the transaction.
Representatives for GoldenTree, Citigroup, Bank of Ireland and Morgan Stanley, which advised the Dublin-based lender on the sale, declined to comment.
Meanwhile, Northridge’s lending is likely to resume on a phased bases as early as this week, it is understood. The lender “temporarily paused” new loan applications last week in the aftermath of a significant court ruling in the country regarding secret motor finance commissions.
Bank of Ireland and its peers in the UK motor finance trade are facing bills in terms of fines, redress or compensation to car buyers after a UK watchdog review into the practice of discretionary commission agreements and follow-on court cases.
Since January, the UK’s financial regulatory watchdog, the Financial Conduct Authority, has been probing historical discretionary commission arrangements between car dealers and banks stretching back to 2007.
These secret deals were where car dealerships and brokers had the power to set interest rates on car loans, and earn higher commissions along the way.
The Central Bank of Ireland recently banned a comparable practice here. The Irish watchdog has no plans to conduct a similar look-back probe.
