State-owned lender Permanent TSB wrote off a €6.4m loan to its former consumer lending business Blue Cube Personal Loans before beginning the process to liquidate the company.
Paperwork just filed with the Companies Registration Office shows George Maloney of RSM Ireland has been appointed as liquidator of Blue Cube Personal Loans, more than seven and a half years after the Permanent TSB subsidiary sold its €351m loan book and more than a decade after the unit stopped lending.
The loans were sold to a team of former managers led by Chris Hanlon who then launched First Citizen - which now ranks among the country's biggest consumer lending businesses. By the time of the sale Blue Cube had ceased issuing new loans. When it had traded, the business specialised in so-called 'forecourt finance' through car dealerships.
Along with its book of consumer and car loans the bank also agreed to hand over the business units that serviced the loans to First Citizen and staff connected to the business also moved from Blue Cube to the new company back in 2012.
Blue Cube has not traded since then, but the company itself had been kept until now. Its most recently filed accounts are for 2017 and show that Permanent TSB, which remains its parent company, forgave an inter-company loan of €6.4m that year owed by the non-trading subsidiary.
That write-off resulted in Blue Cube booking a profit for the year of €6.4m -although with no cash on its books the impact was moot and there appears to be no prospect of any further recovery for taxpayers. The company ended the year with no assets and no liabilities.
In July this year Permanent TSB management, led by CEO Jeremy Masding, initiated a solvent, voluntary, liquidation process for the company which is now in progress. Meanwhile, First Citizen has continued to expand. Last year its main financial backer, US hedge fund Magnetar Capital, pumped a further €30m into the lender as the Irish firm ramped up lending across its motor finance and commercial real estate platforms.
The cash infusion brought First Citizen's investment to about €100m. Its loan book now totals over €300m and spans property, farming and equipment finance as well as motor finance.
Magnetar's backing of First Citizen already included €28.2m of equity for a 66.7pc stake in the business, and it had also provided the lender with €42m in working capital.
Accounts for 2017 show First Citizen's own losses widened to €7.96m for the year from slightly more than €1m in 2016, at the same time as the loan book increased by almost 50pc.
Since its launch, First Citizen, has opened up the car finance securitization market for itself and other market participants - borrowing on the bond market against its loan book in order to raise funds for further lending.