Business Property & Mortgages

Tuesday 23 September 2014

Mortgage holders lose bank protection in BoI ICS sale

Published 26/06/2014 | 02:30

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Bank of Ireland Group chief executive Richie Boucher
Bank of Ireland Group chief executive Richie Boucher

BANK of Ireland has become the first mainstream lender to sell Irish mortgages it holds on its books – under orders from EU authorities in Brussels.

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The loans are being sold to an unregulated investor fund based in Dublin, as first reported in the Irish Independent.

The move is set to prove controversial because the affected homeowners are the latest to lose their Central Bank consumer protections.

Bank of Ireland has agreed a deal to sell €250m of mortgages as part of the disposal of its ICS Building Society unit – a sale ordered by European Commission competition authorities last year.

The loans are being sold to newcomer Dilosk Ltd, an Irish company with plans to become a mortgage lender in its own right here.

Dilosk could not be reached for comment yesterday, but according to its website the company has applied to the Central Bank to become a regulated lender.

"(The) company is currently seeking authorisation from the Central Bank of Ireland to act as a new Irish mortgage lender and will adhere to all the relevant regulatory codes applicable to mortgage lending in Ireland, including the Code of Conduct on Mortgage Arrears," it states.

Bank of Ireland declined to comment last night.

A deal could be announced as early as today. All customers who have a mortgage or deposit account with ICS will be contacted once a deal is formally agreed.

Last year Bank of Ireland was ordered to sell its ICS Building Society mortgage distribution platform as a condition of European Commission approval for its wider restructuring plan.

The restructuring plans obliged the bank to put the ICS broker services, IT and general infrastructure on the market, plus a share of the home loans originated by the lender and potentially a matching level of deposits – if that was what a buyer wanted.

The EU decision was aimed at maintaining competition in the shrinking home loan market here.

Under the deal now agreed, only a fraction of the total €6.4bn of ICS mortgages are to change hands, and no customer deposits will be affected.

The €250m of loans which are to be sold are understood to be fully performing – none is in arrears, and none of the loans are tracker mortgages.

Based on a typical home loan of €200,000 or less, it is likely that between 1,000 and 2,000 customers will be affected directly by the sale.

The balance of the €6.4bn of ICS mortgages – and all ICS deposits – will be transferred across to the main Bank of Ireland, following the deal.

ICS Building Society was the broker sales channel for the bank, meaning home buyers secured a mortgage via a broker.

Sales of "books" of Irish mortgages have become a highly contentious issue over the past 12 months.

Around 13,000 former Irish Nationwide Building Society Mortgage customers lost their consumer protections when their loans were sold earlier this year as part of the liquidation of IBRC.

Subprime lenders Start and Springboard, owned by Permanent TSB, are looking to sell mortgage books.

Irish Independent

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