IL&P to sell car loans and leasing division

IRISH LIFE Permanent (IL&P), which is effectively State owned, has decided to sell Permanent TSB Finance, which predominantly handles car loans.

The financial group has decided that the business, which is led by Chris Hanlon, is no longer core to its activities and has engaged Davy Corporate Finance to sell the division.

The business comprises car loans and finance and leasing deals for agri machinery to farmers, local authorities, landscape gardeners and sports clubs.

It is understood that the two could be sold separately.

The car loan book stands at about €500 million while the agri book is about €100 million.

IL&P recently raised €120 million through a private placing to support its finance arm through 2012.

The business is currently gearing itself up for the start of the new year’s sales season.

Typically, the first three months of any year are the busiest for the sale of new cars here.

It provides car loans of €4,000 or more to borrowers.

A spokesman for IL&P said: “We don’t comment on individual transactions but we are engaged in a deleveraging process which will see us dispose of a number of assets in the coming years.”

Permanent TSB was the biggest player in car finance in Ireland at the height of the economic boom.

The volume of lending has shrunk significantly in the downturn and it now faces competition from some of the major car manufactures, who provide finance directly to the market via their own banking entities.

Staff are expected to transfer with the business. It is not clear how much the finance arm might be worth to IL&P.

Industry sources last night suggested that the company might fetch a small premium to its book value.

Last Friday, the sale of Irish Life collapsed with the increasingly uncertain situation within the euro zone cited as a key contributing factor.

Canada Life, part of Great West Lifeco, the second largest insurance company in Canada, had been the leading contender to take over Irish Life, which was being sold to reduce the State’s cost of bailing out the banks.

Great West had been expected to pay in excess of €1 billion for the life insurance business, which has over €32 billion in funds under management.

The Department of Finance said none of the bids received for Irish Life were “acceptable at the present time”.

The Government owns more than 99.5 per cent of Irish Life & Permanent after injecting €2.7 billion into the bancassurer in July.

It plans to separate Irish Life and Permanent TSB next year.