Costly exit from Irish home loans resulted in €34 million loss last year for GE subsidiary

A Dublin-based financial services subsidiary of US corporate giant GE slipped into the red last year largely due to exceptional costs associated with its exit from the sub-prime mortgages market in Ireland.

Accounts just filed for GE Capital Woodchester Ltd (GECWL) show it made a loss of €34 million in the year to the end of December 2012 compared with a profit of €10 million in the previous year.

The loss included a hit of €18.9 million on the sale of its subsidiary, GE Woodchester Home Loans Ltd, to Pepper Netherlands Holding Cooperative.

According to the accounts, GE sold this business to Pepper for €30.05 million. This was one of two mortgage businesses sold to Pepper last year.

In addition, GECWL received €12.1 million in legal and indemnity costs associated with the sale of subsidiaries to Pepper, whose parent group is based in Australia.

The directors’ report states the loss was driven by the “reduction in interest receivable year on year and a loss on the sale of the investment in GE Capital Woodchester Home Loans Ltd and further impairments of amounts receivable”.

No comment was available yesterday from GE in Ireland on these accounts.

Financial services
GECWL provides a range of financial services here. This includes finance for the public, industry and commercial, mainly via instalment credit, hire purchase and contract hire.

In the past four years it has ceased writing loans in its “capital solutions portfolio” and for the motor trade.

According to the accounts, MJ Flood Leasing and Reloton Ltd became wholly-owned subsidiaries of GE Capital Woodchester Finance Ltd, which in turn is a subsidiary of GECWL.

The accounts show GECWL had interest income of €3.1 million in 2012, down from €11.9 million in 2011.

This included income of €138,000 from customers in the Republic relating to banking, hire purchase and related activities and 68,000 from Northern Ireland.

Interest charges amounted to €1.2 million last year, down from €1.4 million in 2011. This left it with net interest income of just under €1.9 million in 2012 compared with €10.5 million in the previous year.