Tuesday 17 July 2018

Ex-BoSI chief eyes return to mortgage lending

Former BOSI chief Mark Duffy. Photo: Mark Condren
Former BOSI chief Mark Duffy. Photo: Mark Condren

Gretchen Friemann

Former Bank of Scotland Ireland boss Mark Duffy is seeking backers for a new residential mortgage lending business, the Irish Independent has learned.

Mark Duffy, who led the ill-fated Bank of Scotland (Ireland) (BoSI) for 10 years, is canvassing investor support for a new home-loan venture as he attempts to enter a highly-competitive sector that is on course to reach a value of over €10bn this year.

Sources said Mr Duffy has been shopping around a prospectus in Dublin in an effort to drum up backing for the offer which, if successful, will pave the way for the once prominent banker's return to the mortgage market following a near 10-year absence.

When contacted yesterday, Mr Duffy declined to discuss the venture.

It is not clear how the business will be structured but there is speculation he intends to expand his existing LoanBox business lending vehicle, which is controlled by another venture formed over five years ago, called the European Asset Resolution Partners (EARP).

According to EARP's latest available accounts Mr Duffy and another former Bank of Scotland executive, David Fryatt, have served as directors of the firm since its formation in 2013.

The financial statements, which cover the year ending December 2016, show losses widened over that period by €40,298 leaving the business in the red to the tune of €336,649.

The amount falling due to creditors after one year stood at €660,472.

EARP's headquarters are in Merrion Square in Dublin but the firm also operates in Portugal and Spain and is reportedly backed by Stockholm-based businessman Gunnar Dahl, who is also involved in LoanBox.

In 2015, Mr Duffy embarked on a fundraising roadshow to secure investor interest in a commercial lending venture targeted at the credit-starved SME sector.

It's not clear how this business has evolved but EARP's website describes the company as a provider of "integrated funding solutions for the acquisition of smaller (€5m-€50m) non-performing loans to vendors, investors and borrowers".

Mr Duffy's decision to set his sights on the mortgage market comes as competition in the market intensifies with non-bank lenders, Dilosk and Finance Ireland also signalling their intention to take on the six existing providers.

Unlike SME lending, entering the mortgage market would require a licence from the Central Bank.

Sources said Mr Duffy, who oversaw BoSI's ferocious ramp-up in lending during the boom era, plans to grow the mortgage book and fund the business's expansion by securitising the loans - a strategy that many traditional and alternative lenders are pursuing amid mounting appetite in the global debt capital markets for Irish home loans.

Mr Duffy's mooted foray in to the sector comes just weeks after Lloyds Banking Group, which inherited BoSI as part of a takeover of parent HBOS in 2008, cleared its last exposure to Ireland with the sale of a £4bn Irish mortgage portfolio to an investor consortium led by Barclays.

The now dismantled BoSI came under heavy fire in 2015 from Bank of England's Prudential Regulation Authority (PRA) for its breakneck expansion and poor risk management.

Lloyds had racked up €12.3bn of losses on its Irish loans.

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