Austrian bank Bawag has confirmed that MoCo, the mortgage start-up it acquired earlier this year, has commenced a “soft launch” of offering home loans in the Irish market.
“We are pleased to confirm that MoCo commenced mortgage origination activity in the Irish market with a soft launch on November 16th,” said a spokesman for Bawag. “The MoCo team will initially work with a small number of independent brokers with a focus on building strong relationships and delivering exemplary service.”
The Irish Times first reported earlier this year that Bawag, based in Vienna, took over the company behind MoCo, an Irish business that has been looking to enter the mortgage market, in March for a nominal amount of €35.
The deal came as Dutch merchant bank NIBC, which was a key backer of the company behind MoCo, decided earlier this year against providing more equity finance to the start-up.
The executive team at MoCo is led by former AIB executive Aidan Sherry.
Non-bank lenders that entered the Irish owner-occupier mortgage market in the past five years, including ICS Mortgages — owned by Dilosk — and Finance Ireland, were at the coalface as borrowing rates in financial markets and from wholesale funders jumped in 2022 when central banks started to hike rates aggressively to rein in inflation.
By contrast, traditional banks’ loan books here are funded mainly by cheap deposits, which has allowed them to avoid passing on most of the European Central Bank’s (ECB) rate increases since last summer. The ECB has raised its main lending rate from zero to 4 per cent since last July.
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Bawag and the Spanish parent of Avant Money, another Irish non-bank lender that entered the Irish mortgage market in recent years, are both banks that are “seeking to diversify from home markets and utilise capital and funding from their existing balance sheets”, noted Diarmaid Sheridan, an analyst with Davy.
Bawag had made it clear to its own investors over the summer that the Irish business would compete on service and not on price.
“The entry of MoCo to the Irish mortgage market is likely to add modest levels of further competition, particularly given its pricing strategy. The mortgage market has gone through [a] material change in recent times — firstly via exits and subsequently retrenchments from the market. MoCo, similar to Avant Money, has the benefit of a bank owner but is likely to be quite disciplined as it enters a new market,” said Mr Sheridan.
MoCo is the trading name of a company registered in Dublin in 2020 as Cedar Lending Services.
NIBC had built up a 12 per cent stake in MoCo, and was also planning to fund the company’s mortgage offering before it decided to back away from the Irish market. The Dutch company expressed frustration last autumn at what it saw as a “persistence of irrational pricing” by mainstream Irish banks, as they lagged behind European peers in hiking mortgage rates, MoCo said in an email to investors at the time.
The company received more than €3.65 million in investment in recent years from NIBC and a host of high-net-worth individuals, including former AIB chairman Lochlann Quinn, former DAA and Aryzta chief Kevin Toland, Smurfit Kappa chief executive Tony Smurfit and former Green Reit chief executive Pat Gunne.
Dermot Divilly, a former chairman of An Post, and former Davy deputy chairman Kyran McLaughlin were also among the backers. They all lost the money they invested as part of Bawag’s takeover of MoCo.
