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The verdict on Bank of Ireland's €250 million mortgage book sale

The sale of the performing mortgages to domestic player Dilosk was confirmed this morning.

Image: /Photocall Ireland

First published 9.36AM

BANK OF IRELAND has struck a deal with an unregulated entity for €250 million worth of mortgage loans.

Under the terms of the deal, the loans, which are all performing, will transfer to Dublin-based player Dilosk.

The bank was mandated to sell the loans in July of last year as a condition for European Commission approval for its restructuring plan.


The status of Dilosk as an unregulated entity has unavoidably raised eyebrows – and hackles – in some quarters.

David Hall of the Irish Mortgage Holders Association told TheJournal.ie that today’s news is “a very serious development”, and insisted that “anybody else in the mainstream banks won’t be able to sleep at night”.

Indeed, it does seem that there will be more mortgage books sold by the main banks before long, with the Spingboard book from Permanent TSB widely believed to be on the block.

Despite Hall’s insistence that borrowers will no longer be protected by the codes of conduct for mortgage arrears, Karl Deeter of Irish Mortgage Brokers said that “regulation doesn’t always incur good behaviour.”

Of Dilosk, he said: “Yes, they are unregulated but regulation doesn’t confirm some magical outcome.”

I have far more benign view of people described as vulture funds…there’s no need for mass fear among people.

It’s also understood that Dilosk could become regulated before the September deadline for the transfer of loans, although neither the Central Bank nor Dilosk could confirm this.

A spokesperson for the National Consumer Agency said that it had flagged concerns over the sale of loan books to unregulated entities with the Department of Finance and the Central Bank.

The NCA said it could not comment on a specific case, but is generally concerned that customers are not disadvantaged, with the main risk identified as a blanket ban on bringing disputes with unregulated entities before the financial services ombudsman.

The Central Bank said it has also raised concerns over the presence of unregulated purchasers of mortgage books in the Irish market and “is working closely with the Department of Finance on the issue”.

The Bank said that it is concerned that the borrower protections will be maintained by the new owners of any mortgage books.

The deal

The deal covers the sale of the ICS Building Society distribution network, which hitherto had been part of Bank of Ireland.

As part of the sale, Bank of Ireland is providing €100 million in vendor finance to Dilosk.

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Dilosk has applied for authorisation from the Central Bank of Ireland to act as a retail credit firm, and it intends to comply with all the relevant regulatory codes applicable to mortgage lending in Ireland.

The company’s founder said that in addition to the purchase of the BoI loans, it intends to offer customers new residential mortgages through the ICS brand.

Fergal McGrath said: “Traditionally ICS has been one of the leading players in the Irish intermediary mortgage market and this acquisition gives Dilosk a solid platform to build on a recognised and long established name.”


Central Bank governor Patrick Honohan has previously called foul on the sale of mortgages to unregulated funds, which has been a feature of the sell-off of IBRC assets during the liquidation of that entity.

Speaking to the finance committee earlier this year, Professor Honohan said that he had raised his concerns over the practice with Government.

“I am not pleased with this developments” he said in April.

“It has been the position of the Central Bank, communicated to government, that equivalent amount of protection should be applied to people moving out of regulated entities.”

Updated at 2.41PM

Read: Honohan “not happy” about mortgage sales to vulture funds>

Read: Too much debt and not enough houses: Ireland’s creditless recovery is here to stay>

About the author:

Jack Horgan-Jones

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