A group of Irish businessmen plans to establish a new bank which, they claim, will undercut the dominant players in the mortgage business. Yellosun Capital Ltd is believed to have raised €1 million with a further €25 million dependent on securing a credit line worth up to €1 billion from a major European or US bank.
Moves to secure such a credit line are imminent, it is believed. If successful, personal and institutional investors are believed to have expressed provisional interest in supporting the project.
The group is backed by the former Irish Permanent chief executive, Mr Billy Kane, and the former Guinness Peat Aviation investor, Mr Peter Ledbetter.
Mr Kane is expected to take the post of chief executive and Mr Ledbetter is expected to become chairman of the company. Other investors are believed to include the Kingspan chairman and chief executive Mr Gene Murtagh.
Yellosun aims to break into the market by developing a low-cost business model akin to that of Ryanair in aviation. The company plans to use mortgage intermediaries to develop market share with the customer side of the operation managed through a call centre and internet site.
With no branch network, it will use a low-cost base to undercut rival lenders. It also aims to provide credit card and personal loan services to mortgage customers.
The property market is still booming and the Irish mortgage business is believed to be one of the most profitable and fastest growing in Europe. As such, it is deemed attractive to potential investors keen to develop a presence in the market.
While Companies Office information about Yellosun is scant, it is thought the company will require only a moneylender's licence. Because it will not be a deposit-taking institution, the company is said to believe that a banking licence per se will not be required.
The company was established by Mr Jürg von Geitz, a former mortgage broker and recruitment consultant. Other backers include Mr John Byrne, whose IT company Information Mosaic will develop computer systems for the project.
Information Mosaic was involved in the Dublin-based First-e internet bank owned by Enba, which closed in September last year. That operation was backed by the French bank, Banque d'Escompte. It is thought that another Dublin IT company, which has developed internet-based banking systems, was briefly involved in the initiative but left when a potential conflict of interest arose with its clients.
In presentations to potential investors and capital partners, the company is believed to project losses in the first three years of operation. If capital backing can be secured soon, the company aims to enter the market by the middle of next year.
It argues that price competition is scarce in the Irish loan market, which is attractive due to the high home ownership rate and low repossession rate.
The corporate finance arms of PricewaterhouseCoopers and solicitors Ivor Fitzpatrick & Co are advising the group.
