Mortgage buyer Pepper Asset Servicing books profits on Woodchester loans

The Irish arm of Australian financial group Pepper Asset Servicing made an operational profit of €1.2 million in the first three months after it took over a major portfolio of mortgages from GE Capital Woodchester Home Loans Ltd.

Accounts just filed for Pepper Finance Corporation (Ireland) Ltd, which have been provided to The Irish Times, also show that it took an impairment charge of €109 million on the portfolio when it transferred from GE's ownership.

Impairment charge
The accounts show that the loans were valued at €281.9 million on September 27th, 2012, the last date on which ownership resided with GE.

The impairment charge indicates that the portfolio of loans was valued at €173 million when it transferred to Pepper.

It also gives an indication of how much Pepper paid for the portfolio. Pepper owes €146 million to related companies and paid back €20 million to its parent in unused inter-company loans in the three-month period.

€600m value
The GE portfolio had a face value of more than €600 million before the financial crash in 2008, when it stopped writing new business. The accounts show that GE injected €424 million into the Irish company before its acquisition by Pepper. The global corporate giant then forgave this funding.

This injection of funds brought GE’s Irish subsidiary into a net asset position before its sale to Pepper.

Pepper’s account show it earned income of €4.6 million in portfolio management fees in its first three months of business here. Its administration expenses amounted to €3.5 million, with the company employing an average of 96 staff during the year.

The accounts show that GE repossessed €3.7 million worth of properties in 2012 before transferring the portfolio to Pepper.

In addition to acquiring the GE loans, Pepper is also now managing loans for other groups. This includes CarVal Investors’ Irish loans, which have a face value of €380 million, and commercial property loans for Danske Bank with €600 million outstanding.

Preferred bidder
Earlier this month, Pepper was appointed by the National Asset Management Agency as the preferred bidder to service a portfolio of personal loans and residential mortgages with a par debt value of €1.8 billion, that could transfer from Irish Bank Resolution Corporation if the special liquidators do not sell it to a third party.