What is Avant's strategy in Ireland?

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letitroll

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[Copied this bit from another thread - Brendan ]

Dont count on Avant being a committed player here long term, its my understanding, Avant are here in Ireland to help itself with a specific asset liability duration matching issues it has at the parent related to its insurance subsidiary and Ireland provided a unique opportunity in the European/EURO area to net some of those liabilities off (given our high rates vs Euro rates). If underlying ECB/sovereign rates rise in the core EU area and Avant can pick up 2% paper there it will.
 
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I thought that Avant were part of a strategic initiative by Bankinter by matching certain long term liabilities? It would seem to me they are disincentivising fixing once the initial period is complete?

Can we draw some conclusions from the variable rate being close to their fixed rates at the lower LTVs? This would seem to be significantly different to the strategy offered by the incumbents.

Also, at the lower LTVs, there is No/little competition and they are now shifting strategy slightly. Instead of incentivising lower risk customers they will now use the prime risks they have attracted to subsidise higher risk clients in order to build market share.
 
Itchy said:
Can we draw some conclusions from the variable rate being close to their fixed rates at the lower LTVs? This would seem to be significantly different to the strategy offered by the incumbents.
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They could reduce the variable rate to 0% in theory - nobody can avail of it right now, but their APR would look amazing....

"Follow-on variable rates quoted are subject to change and may be determined by prevailing market conditions at the time of fixed rate period expiry."

but the drivers behind the rate change are set out in their variable rate policy statement

variable rate policy

www.avantmoney.ie www.avantmoney.ie

However, a 10 year fixed rate at 2.1% is much much better value than a variable rate at 2%
 
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Hi Itchy

You should ask first of all "Why do all banks except Avant have variable rates higher than their fixed rates?"

It makes no sense in a market where rates are expected to rise.

So Avant's roll-off variable rate (which is purely theoretical at the moment) is normal. The rest are out of step.

Brendan
 
Itchy said:
I thought that Avant were part of a strategic initiative by Bankinter by matching certain long term liabilities?
Click to expand...

Have you a link to it?

I know very little about such financing, but it seems to me that it would not make sense to set up a new business which is probably going to be loss-making for a few years, to match some short-term liability mismatch.

Could they not achieve what you seem to be suggesting by buying securitised mortgages with a higher yield?

Brendan
 
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Makes absolutely no sense!

Nobody is going to set up an entire mortgage operation to manage asset / liability cashflow timing mismatches when they could achieve the same outcome with a small number of bond transactions.
 
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Brendan Burgess said:
Hi Itchy

You should ask first of all "Why do all banks except Avant have variable rates higher than their fixed rates?"

It makes no sense in a market where rates are expected to rise.

So Avant's roll-off variable rate (which is purely theoretical at the moment) is normal. The rest are out of step.

Brendan
Click to expand...
You regularly ignore the most basic fact about banking - financial products and just lump everything into one big pot, which of course it is. When you start with a basic misunderstand you can end up anywhere.
 
Me too, this is beyond my current understanding but would like to know more please.

Competition is withering away and knowledge is power so as to avoid expensive mistakes.
 
Once upon a time, not too many years ago, Avant was owned by Evo Banco in Spain which was owned by Apollo, a US vulture fund. That corporate structure saw Avant pared back to the core and many staff made redundant. Apollo made its money and headed off into the sunset.

Enter the new owner, Bankinter. On its face, it looks like they’re here for the long term with their mortgage offering. But who knows?

Look at Ulster Bank and all the other non-Irish entities which have/had mortgage books and substantial market-share and still saw fit to exit.
 
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