€107.1m loss at GE Capital Woodchester

GE Capital Woodchester, the sub-prime mortgage lender, recorded pre-tax losses in its Irish business totalling €107.1m in 2011.

Accounts filed with the Companies Office show GE Capital Woodchester Home Loans Ltd sustained the loss after incurring exceptional costs of €92.9m through the writing off of bad and doubtful debts.

The loss in 2011 follows losses of €71.9m in 2010.

The figures show that the firm had repossessed properties totalling €4.5m on its books in 2011.

A note attached to the accounts states that “properties were repossessed in 2008, 2009, 2010, and 2011 as a result of a failure by certain customers to meet their contractual monthly mortgage repayments.”

The firm ceased to write any new business in mortgage-related products in late 2008.

The figures show that the firm had €466m in loans to customers at the start of 2011 prior to the bad debt provision.

Last year, Australia’s biggest independent mortgage lender, Pepper Home Loans Group, agreed to purchase GE Capital Woodchester Home Loans for a total of $188m (€149m).

According to the directors’ report, the provision of bad debts of €93m increases the bad debt provision coverage on the loan book to 26% compared to 15% in the prior year.

The directors state: “Facing a challenging economic environment, the company will continue to manage its loan book to minimise losses.

In the three years prior to 2011, GE Capital Woodchester wrote off €84m in bad debts.

The figures show that in 2011, the firm received €10.3m in interest income and paid out €12.6m in interest, resulting in a gross loss of €2.3m.

The firm also incurred the €92.9m bad debt provision and an additional €11.7m in administrative expenses.

The firm’s accumulated losses and shareholders’ deficit stood at €223.1m at the end of Dec 2011.

In a post-balance sheet event, the accounts disclose that the firm’s loans, with a carrying value of €424.6m, were forgiven, resulting in the recognition of a capital contribution.

The firm also repaid loans from related parties totalling €56.6m.

The note attached to the accounts states: “As a result of these post year-end transactions, the company has returned to a net asset position.”

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