Wednesday 17 October 2018

Goldman Sachs backs deal to buy GE Capital's Irish loans

Donal O'Donovan

Donal O'Donovan

BANKING giant Goldman Sachs is backing a deal to buy up a 3,500-strong Irish mortgage book.

The US bank is providing financing for Australian mortgage company Pepper Home Loans to buy GE Capital's Irish mortgages.

The deal to sell the loans to Pepper Home Loans was announced back in June. A second deal bringing in Goldman as a silent partner is close to completion.

Pepper is buying €600m of mortgages from GE Capital, but at a steep discount of around 40 cent in the euro, reflecting the likelihood the "sub-prime" loans will involve big loses for whoever owns the book.

Now it has emerged that Goldman Sachs is part of the bid, in what's thought to be the first transaction of its kind for the bank. The bulk of the finance for the Irish deal is being put up by Australian company Pepper, with Goldman as a minority partner.

The Australian investor will take on the day-to-day running of the loan book. If it can get back in more than 40pc of what is owed on the mortgages the partners will be in profit.

In addition to recovering old debts Pepper is considering moving in to the mortgage market here in its own right. Pepper plans to use the move into Ireland as a launch pad to the UK and Europe.

As well as buying up loans, it is looking at offering its services to other lenders as a "servicer" of debts owed to other institutions.

Irish Independent

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