First Citizen Finance, the non-bank lender led by former Permanent TSB banker Chris Hanlon, has raised more than €235 million in its latest securitisation.
The lender, set up in 2012 by the former head of Permanent TSB Finance, specialises in providing retail financial services including car finance, agri finance and commercial retail lending. This is its fourth and largest securitisation transaction.
First Citizen Finance said it had secured the support of about 20 of the largest US and European banks, insurance companies and investment managers, and that the offer was oversubscribed for each of the relevant tranches.
Managing director Mr Hanlon said the latest securitisation exceeded the company’s expectations.
“We are delighted with the quantity and quality of investors who supported this transaction and the keen pricing we secured,” he said.
“Pricewise, we are very happy with the reference price for the Triple-A tranche (€208 million) at 1 Month Euribor + 77bps. This reflects a very strong performance against key peers,” he added.
Mr Hanlon confirmed that the proceeds would be used to support the company’s lending programme for motor finance, which comprises the largest share of its business, along with other product lines.
The lender reported a profit of almost €3.5 million in 2021, with Mr Hanlon saying that 2022 was also a “very good” year. The company is expected to publish results next week.
Employing almost 100 people, First Citizen Finance has a loan book that stands at just under €700 million, made up of more than 30,000 loans.
Mr Hanlon said that despite rising inflation and cost-of-living pressures, he “wouldn’t see a significant downturn, if any downturn” in demand for car financing.
“Car sales are ahead about 20 per cent on last year. Last year wasn’t a great year, nor was the year before, but there’s €150 billion in savings currently deposited in the Irish banks,” he said.
“I would anticipate that as interest rates now harden and they’re there for longer, it obviously has an impact on people’s ability to spend, and so it will become more difficult to attract that in. But I wouldn’t see a significant downturn, if any downturn, for the foreseeable future… I think the demand will be there, people are looking at electric, [there’s] increased demand, and so I would be pretty confident about the future,” he added.
The lender currently charges interest rates of about 8.25 per cent on its loans, which have increased from about 5.5 per cent when European Central Bank (ECB) rates were at 0 per cent. Mr Hanlon said this rise is in line with hikes by the ECB in the last 12 months.
The securitisation was arranged by Deutsche Bank, who also acted as lead manager.