Saturday 20 January 2018

Bank of Ireland sells 2,000 ICS mortgages to new fund

Bank of Ireland HQ, Baggot Street Lower, Dublin 2
Bank of Ireland HQ, Baggot Street Lower, Dublin 2
Thomas Molloy

Thomas Molloy

The ICS Building Society has ceased to exist after Bank of Ireland became the first mainstream lender to sell Irish mortgages to meet demands from Brussels.

The loans for €223m were sold to a regulated investment firm in Dublin which hopes to expand here.

There was some good news for borrowers; the new owner promised to ICS mortgage borrowers all the protections which they had enjoyed under Bank of Ireland's control.

The loans are being sold to newcomer Dilosk, an Irish company with plans to become a mortgage lender for buy-to-let investors here.

Dilosk said in a brief statement on its website that it will issue confirmation letters to all affected customers regarding the transfer of their mortgage accounts.

The letters will include new contact details for up to 2,000 customers.

"My colleagues and I would like to welcome our new customers to Dilosk," chief executive Fergal McGrath said. "We look forward to providing them with high quality service to meet their needs now and into the future."

Bank of Ireland agreed a deal to sell the mortgages as part of the disposal of its ICS Building Society unit - a sale ordered by European Commission competition authorities last year. All customers who have a mortgage or deposit account with ICS will now be contacted.

ICS was founded in 1864 and incorporated 10 years later. It was bought by Bank of Ireland in 1984.

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 €223m 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.

Comment: Building society annihilation a disaster for mortgage hunters

Yesterday's news that the 150-year-old ICS building society has finally been sold marks an inglorious end to the company that was mentioned in the draft versions of James Joyce's Ulysses when Leopold Bloom wanted to buy his dream house.

Time will tell what this forced sale will mean for today's 2,000 odd customers who borrowed from a Bank of Ireland-owned mortgage company but now find themselves forced to do business with a publicity-shy investment firm.

The omens appear to be good; the new owner has promised to abide by the code of conduct which prevent other lenders from endlessly harrying customers in arrears.

Legal protections have also been promised for the increasing number of borrowers who find themselves in this position but those protections have not been enacted yet.

The end of ICS, a building society formed to provide housing finance to Protestant civil servants and run in the early days by engineer William Dargan and future unionist leader Edward Carson, marks another contraction in the number of Irish building societies and fewer lenders for those who want to buy an ordinary house.

The last 20 years has seen the almost complete annihilation of the building society sector. The ICS was among the first to go followed by Irish Permanent and First Active. EBS, a building society originally for teachers, resisted longer than most but has also fallen victim to the bust and now belongs to Allied Irish.

In each case, those who had loans with these lenders stood to benefit financially when they were demutalised and it was not hard to persuade board members and ordinary borrowers and savers to sell.

In retrospect, the destruction of this Credit Union-like network of small lenders has been something of a disaster for the next generation looking to borrow to buy a house.

Disaster is perhaps too mild a word. Inter-generational robbery by baby boomers might be closer to the mark.

Perhaps a new wave of alternatives will gradually be created by the internet generation but the destruction of our building societies in the deregulation mania of the 1980s was a great loss.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business