Bluestone’s Irish book bought by UK motor lender for over €17m

UK-listed car finance group Close Brothers paid over €17m for Bluestone Motor Finance’s Irish operations as the lender looks to re-build its presence in the Republic.

The €17.2m paid by Close Brothers for the Irish business of UK-headquartered Bluestone Group was revealed in its half-year results to January 2024. It completed the acquisition of Bluestone in October.

Following this acquisition, the results said Close Brothers’ motor finance business was re-building its presence in the Republic.

Bluestone had a loan book of £16m at the end of January.

Close Brothers previously had a deal to provide finance to First Auto Finance, the car finance business of Finance Ireland, one of the largest non-bank lenders in the State.

Close Brothers supported over 130,000 customers in Ireland to finance vehicles but ceased to service new loan agreements through First Auto Finance from July 2022 onwards.

Earlier this month, Close Brothers announced a £400m plan to bolster its capital position as it prepares for the impact of a UK regulatory probe into motor financing deals.

Analysts have estimated the investigation could cost the banking industry up to £16bn.

Close Brothers said it would be prudent to strengthen its balance sheet and cut costs in light of “significant uncertainty about the outcome” of the review at this early stage.

The lender added it had “no legal or constructive obligation” regarding the probe and had not yet booked a provision as a result.

Shares in Close Brothers have plummeted around 55pc since the Financial Conduct Authority, a UK watchdog, announced it was investigating discretionary commissions on car-financing deals dating back a decade.

When announcing the probe in January, the FCA said such deals gave lenders and dealers an incentive to charge customers higher interest rates.

While most experts have indicated it is too early to reliably estimate the impact of the review by the FCA until more clarity is provided later this year, some bank estimates range from £6bn to £16bn for the entire UK banking industry.

Royal Bank of Canada Analysts estimated that Close Brothers could be hit with a £250m redress bill.