Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

It is important in answering the Deputy's question to provide the background as to why Bank of Ireland has agreed to sell €250 million of the ICS loan book to Dilosk Limited. In July 2013, Bank of Ireland agreed an amendment to its restructuring plan which had been agreed with the European Commission in respect of state aid received by the bank. This allowed the bank to retain its life assurance subsidiary, New Ireland. As part of this amendment, the bank committed to certain substitution measures, including the sale of the ICS distribution platform together with, at the option of the acquirer of the platform, up to €1 billion of mortgage assets and a similar quantum of matching deposits. The purpose of the ICS substitution measure is to support new entrants in the Irish mortgage market, thereby increasing competition to the benefit of the consumer.

As the Deputy is aware, the bank announced on 26 June that it had agreed to sell the distribution platform, together with €250 million of mortgage assets at par, to Dilosk Limited. No deposits are transferring as part of the sale. Dilosk is an Irish financial services company, headquartered in Dublin which plans to grow its mortgage business in Ireland by offering new residential mortgage loans. According to its website, Dilosk will offer mortgages to borrowers seeking to purchase or refinance residential property with a particular focus on residential investment properties, that is, buy to let.

The ICS sale is the final divestment commitment to be completed by the Bank of Ireland under its EU restructuring plan.  Given the reduced number of lenders now operating in the mortgage market, this transaction is to be welcomed as it introduces a new entrant and should therefore contribute to greater competition.

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