https://www.sbpost.ie/post/pages/p/story.aspx-qqqt=IRELAND-qqqm=news-qqqid=27427-qqqx=1.asp
IIB Bank is planning to quit the Irish sub-prime mortgage market over the coming months, according to senior banking sources.
Executives at IIB have taken the decision to withdraw from the sector as a result of the recent credit crunch and difficulties in the international sub-prime market. The bank does not intend to make a formal announcement on the exit strategy, but will scale back its sub-prime operations by simply not writing new mortgages.
IIB Homeloans entered the sub-prime market earlier this year, when it forged a joint venture with Lehman Brothers, the US investment bank. The joint venture, Stepstone, aimed to tap into the €1 billion-plus Irish sub-prime mortgage market.
However, the bank has now decided to scale back its sub-prime activities and has instructed Stepstone executives to apply stricter criteria for loans. In addition, the bank does not plan to make ‘‘any real effort’’ to attract new business, according to senior IIB sources.
The move by IIB is the latest in a series of changes in the Irish sub-prime market in recent weeks.
South African bank Investec recently bought the 40 per cent stake in another Irish sub-prime provider, Nua Homeloans, that it did not already own, from Finance Ireland.
Finance Ireland boss Billy Kane, a former executive of Permanent TSB, said the decision to exit the market came amid ‘‘current uncertainties in the securitisation market’’. Investec followed up the acquisition by putting Start Mortgages, Ireland’s biggest sub-prime lender, up for sale.
GE Money, the banking division of US conglomerate General Electric, is now in talks to buy Start Mortgages.
The decision to offload Start came just days after the company appointed a team of corporate lawyers and accountants to analyse its financial situation.
Within 24 hours of reporting back to Investec, the decision was taken to offload the lender. It is understood that the company looked at restructuring part of its debts, but opted instead for a trade sale.
