Fresh Mortgages, the mortgage lender founded by serial entrepreneur David Ryan, suspended its new loans business yesterday after a falling out with Credit Suisse, which had funded the company's loan book.
Fresh is backed by some of the most prominent names in Irish business, including Sean Fitzpatrick, the chairman of Anglo Irish Bank, Lar Bradshaw, chairman of the Dublin Docklands Authority, financier Paul Connolly, and Ryanair director James Osbourne.
Fresh has been attempting to carve a lucrative niche for itself by lending to business people with considerable assets who, not being PAYE earners, might have difficulty securing a typical mortgage.
Launched last May it used Credit Suisse to fund these mortgages. Under the terms of the deal Credit Suisse agreed to purchase prime mortgages to the value of €750m and non-conforming mortgages to the value of €350m from the Irish lender.
The suspension follows intense negotiations with Credit Suisse over what the Swiss bank was willing to pay for those mortgages in the current climate. It is understood that, in the six month since the original deal was agreed, the Swiss bank has taken on mortgages from Fresh to the value of €10m.
According to sources familiar with the negotiations, Credit Suisse's new terms would have rendered Fresh uncompetitive in the Irish mortgage market.
According to one banker, Credit Suisse may have been keen to exit the Irish market. Earlier this month, it announced its investment banking business, which funded the Fresh mortgage book, struggled to break even in the third financial quarter after writing down over €1.3bn in residential mortgages, leveraged loan commitments, and collateralised debt obligations..
Fresh is now negotiating with two European banks, one of which is based in the UK, with a view to finding an alternative backer for its book. It is understood neither of the backers would need to go to the capital markets to raise funding.
The timing of the Credit Suisse withdrawal has been particularly unfortunate for Fresh. It is understood it recently agreed a strategic alliance with some of the country's largest housebuilders. Under the terms of this deal, the housebuilders have agreed to send as much business as possible to the mortgage lender. They also agreed to invest €6m in the company.
It is understood Fresh's existing customers are unaffected by yesterday's suspension.
Mr Ryan set up Spirit Telecom, one of the first alternative fixed-line telephone companies in the Irish market.
He sold that company to Interoute, an international telco, just before the collapse in the telco valuations. Acting for Interrout he went on to resell that business to BT.