Pepper buys HSBC's NZ home loans book
Pepper Money says it has bought HSBC's New Zealand mortgage book which is expected to have outstanding balances of about $1.4 billion when the transaction settles, expected in late November.
Friday, September 1st 2023, 12:53PM
by Jenny Ruth
Pepper says the purchase will add further scale to its NZ home loan business but didn't say how much it will pay for the book.
Sydney-based Pepper's assets under management at June 30 were A$18.9 billion.
Chief executive Mario Rehayem says the announcement is a further step in his company's growth strategy.
“It is a testament to the ongoing diversification of Pepper Money's revenue streams,” Rehayem says.
“Pepper Money has continually demonstrated our strong capabilities in loan portfolio acquisition and management over 23-plus years, and this acquisition will see the business continue to build scale in NZ, a market which we understand well, having serviced mortgages and delivered compelling customer service since 2011,” he says.
In June, HSBC said it had decided to withdraw from both the wealth management and retail banking markets in NZ because it considered both these operations as relatively small scale amid an increasing amount of regulation.
HSBC's last disclosure statement for the six months ended June 31 showed its residential mortgage book was $1.68 billion at that date, including off-balance sheet exposures, with more than 99% of loans having loan-to-valuation ratios below 80%.
Pepper described the book as “a prime, seasoned and well-performing portfolio.”
Pepper says it will fund the transaction in a similar way to to other loan origination activity and as it has funded other loan book acquisitions in the past, “namely a combination of senior and mezzanine funding with Pepper Money contributing the first loss equity.”
Pepper entered NZ in 2011 when it bought GE Capital's Australian and NZ home lending business. In 2019, it rolled out a full suite of residential home loans from prime, near prime and specialist loans.
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