BLAKE DAWSON WALDRON advised HSBC Bank Australia on the sale of its $2.26 billion broker originated residential mortgage book to residential mortgage provider, FirstMac.
HSBC retains its direct Australians loans book, which is worth $4.5 billion.
Lead partner on the deal, Philip Maxwell, said some of the key challenges included the large value of the mortgage book, and the many brokers involved.
“It is a $2.2 billion book, so it’s quite large, and it had over 10,000 separate accounts in it, so there’s a lot of moving parts in this sort of business,” he said.
“We obviously needed to [design] the legal structure to give effect to the transfer, which is by way of legally assigning the loans, which have some consumer credit issues attached to them.”
Maxwell said Blakes’ corporate/M&A team, including himself, worked closely with his firm’s financial services group, including partners Stephen Cavanagh, and Andrew Young to complete the deal.
They were first instructed in June, and the deal was completed by the end of November last year.
“Obviously, if you are buying a book of loans, one of your concerns is, how does it fit with the relevant legislation and regulation for consumer credit?”, he said.
“The other issue is the brokers, because they’re the connection between the customer and the business.”
He said they had to ensure the brokers understood they had to enter into a new contract with FirstMac.
“So you are not only concerned with customers, because they have to be happy with the business continuing, because it is a very competitive market, but also you have to focus on the brokers because they are the connection between the customer and the [client].”
Stuart Davis, CEO of HSBC Bank Australia said “while distributing through brokers has given our portfolio scale, it precludes two of our greatest strengths — our service proposition and the ability to cross-sell our products”.
As well as Maxwell, Cavanagh and Young, the BDW team included Jonathan Gordon, Brent Delaney and Corey McHattan (corporate), Paul Jenkins (financial services), Barbara Phair (stamp duty and GST), Rod Cox (tax), Jennie Mansfield (IR/super) and Bronwyn Badcock (property).
Mallesons Stephen Jaques advised First Mac.
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