Mortgage

The Bank of Åland will transfer most of its Swedish mortgage portfolio to Borgo AB

The Bank of Åland will transfer most of its Swedish mortgage portfolio to Borgo AB
Written by Publishing Team

Öland B Bank
Inside information
January 21, 2022, 9.00 eat

Öland Bank will transfer most of the Swedish mortgage portfolio to Borgo AB

On January 20, 2022, the board of directors of Ålandsbanken decided to carry out the transfer of most of the bank’s Swedish mortgage portfolio and previously issued Swedish covered bonds to the Swedish company Borgo AB. This transaction is subject to approval by the Finnish Financial Supervisory Authority and its Swedish counterpart.

The transaction is part of a collaboration that began in the fall of 2019 between Öland Bank, ICA Bank, Ikano Bank, Söderberg & Partners and Borgo with the aim of creating a major modern player in the Swedish mortgage market. As part of this collaboration, Öland Bank – along with its IT subsidiary Crosskey Banking Solutions – will provide platform solutions to new mortgage company Borgo and contribute its existing knowledge on mortgage management. During the preparatory phase, before Borgo could start its operations, Öland Bank handled mortgages for ICA Bank and Söderberg & Partners clients on its balance sheet.

After the deal, Hollande Bank’s ownership stake in Borgo will initially reach 19.9 percent. The transaction will primarily take place during the first quarter of 2022, 2022, but some small portions of the loan portfolio will be transferred later in the year. As previously reported, the total transferred mortgage portfolio is about SEK 12.5 billion, and the previously issued covered bonds of SEK 7.5 billion – will change from Bank Öland plc under Finnish mortgage legislation to Borgo as an issuer under Swedish mortgage banks legislation real estate.

The transaction will have a positive impact on Öland’s net operating profit in the first quarter, but will later mean a smaller loan portfolio on Öland’s balance sheet and therefore lower current net interest income for the bank. In the future, Öland Bank will instead receive a distribution fee for loans taken through the brokerage and platform revenue to maintain all of its various Borgo services. The overall impact for the full year on 2022 earnings is expected to be positive.

Borgo currently has four “industrial investors” – ICA Bank, Ikano Bank, Söderberg & Partners and Bank of land – all of whom will provide their clients with real estate loans managed on Borgo’s balance sheet. Southern Swedish savings bank Sparbanken Syd has signed an agreement to be listed as Borgo’s fifth industrial investor and mortgage distributor. There are also about a dozen financial investors who have signed agreements to become co-owners of Borgo.

For more information, please contact:

Peter Wiklöf, Managing Director and CEO of Öland Bank plc, Tel. +358 40512 7505

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