An Post no longer in talks with MoCo on mortgage offering

An Post, which has been seeking to enter the mortgage market for the past four years, is no longer in talks to set up a lending partnership with non-bank start-up MoCo, according to sources.

While the Competition and Consumer Protection Commission (CCPC) highlighted the expected MoCo and An Post venture in a report last month – relating to its May approval of Bank of Ireland’s purchase of KBC Bank Ireland loans – sources said that the parties were no longer in talks by the time of publication.

The Irish Times first reported on the discussions in September last year, in the wake of the announcements that Ulster Bank and KBC were leaving the market.

A spokesman for An Post declined to comment on the matter, while representatives for MoCo did not respond to efforts to secure comment on Wednesday.

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Still, the An Post spokesman said that the State-owned organisation “still very much intends to come to the market with a mortgage product next year”. He declined to comment on potential partners.

MoCo, the trading name of a company registered in Dublin in 2020 as Cedar Lending Services, is now understood to be advancing a plan to come to the market with an offering, funded by European investment and pensions money, that would be pitched through mortgage brokers.

Securing authorisation

This remains subject to the firm securing Central Bank authorisation as a retail credit firm. This process is understood to be well-advanced.

MoCo is led by a number of financial industry executives, including chief executive Patrick Good, who previously worked with Key Capital, Banca Mediolanum and Davy.

Non-bank lenders, including ICS Mortgages, Finance Ireland and Avant Money, have emerged as a competitive force in recent years, following the exits of a number of overseas banks in the wake of the financial crash.

However, these companies have had to increase some of their mortgage rates so far this year, as their own borrowing costs in international capital markets rose as investors speculated on central bank rate hikes.

The European Central Bank (ECB) moved on Thursday to raise its main rates by 0.75 of a percentage point, or 75 basis points as it upped its efforts to tackle soaring inflation. Its largest-ever rate increase followed on from a 0.5 of a point rise in July.

“Going forward, we expect the ECB to slow its pace of rate rises, hiking another 50 basis points in October and 25 basis points in December,” said Altaf Kassam, head of investment strategy for Europe, the Middle East and Africa for State Street Global Advisors.

The CCPC report published last month on Bank of Ireland’s planned purchase of KBC Bank Ireland’s €9 billion of performing mortgages highlighted that An Post has ambitions to position itself “as a strong market player” in the home loans space and plans to have green loans in its offering.

An Post has typically taken a partnership approach in establishing financial products and services, partnering with Mastercard on foreign exchange services and with Avant Money for credit cards and personal loans, the CCPC noted.