Business

Nonbank lender Dilosk agrees to buy €400m Ulster Bank home loan portfolio

Agreement is subject to regulatory approval but is expected to close in the coming months

Fergal McGrath, chief executive of Dilosk, said the deal marks a significant milestone for the company. Photograph: Jason Clarke

Ian Curran
Fri May 3 2024 - 10:15

Dilosk, the nonbank mortgage lender, has agreed to buy some 4,000 residential loans from NatWest Group worth €400 million as part of its strategy to grow the value of its mortgages under management to about €2 billion.

The agreement, which is subject to regulatory approval, is expected to be completed “over the coming months”, Dilosk said in a statement on Friday.

The lender, which acquired the ICS Mortgages brand and platform in 2014 from Bank of Ireland and ventured into owner-occupier home loans in 2019, said the legal and regulatory protections attached to the mortgages in the €400 million portfolio will not change as a consequence of the sale.

“We look forward to welcoming our circa 4,000 new customers and assure them of our dedication to meeting their mortgage needs today and into the future with the utmost care and professionalism,” Dilosk chief executive Fergal McGrath said. “This acquisition marks a significant milestone for Dilosk and ICS Mortgages as we increase our mortgages under management to circa €2 billion.”

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The sale of the loan portfolio is part of Ulster Bank’s phased withdrawal from the market in the Republic. As part of that process, the lender has sold off its €20 billion loan book in chunks, most recently offloading a €700 million portfolio of personal and commercial loans to Elmscott Property Finance last summer.

In a statement on Friday, Ulster Bank said the roughly 4,000 loan portfolio to be sold to Dilosk includes those formerly known as offset mortgages. These are loans issued before the crash that were designed to reduce customers’ interest bills by offsetting funds in current or deposit accounts to lower the balance on their mortgage account and were considered among the most difficult for the NatWest-owned lender to sell.

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The bank paved the way for the sale of the offset loans, writing to some 4,500 customers with offset mortgages late last year to tell them it would remove the offset feature but would give most of them a goodwill payment equating to double the lifetime financial benefit they were expected to get from the feature.

Customers were told the product would retain certain elements, including its linkage to the European Central Bank tracker rate and the so-called pay and redraw feature, allowing them to pay spare cash into the mortgage account while having the flexibility to take it out again.

Jane Howard, chief executive of Ulster Bank, said Dilosk had agreed to retain these features but was changing the name of the product “flexible mortgage”.

“We will be communicating with customers over the coming months to keep them appraised of progress,” she said. “Following any relevant approvals, we will work closely with Dilosk to ensure that the transfer of the portfolio is as smooth as possible”.

Asked how many loans remain on Ulster Bank’s books, a spokeswoman said the lender could not comment on future sales. However, she said: “Following conclusion of all agreed loan sales there may be a minimal number of loans that may remain on our balance sheet.”

Ian Curran

Ian Curran

Ian Curran is a Business reporter with The Irish Times

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