Westpac is believed to be offloading its retail auto loan back book in a move that some industry experts expect will see it wind up in the hands of a debt collection company.
In 2021, Westpac announced a sale of its motor vehicle dealer finance and novated leasing business to Cerberus Capital Management’s Angle Finance, whereby the private equity firm would pick up auto dealer and wholesale loans worth about $1bn, its strategic alliance agreements with vehicle manufacturers, and Novated lease origination capability and related agreements.
However, it retained its existing retail auto loans at the time of around $10bn originated by the businesses being offloaded.
Westpac said at the time that the loans would be run down in the normal course of business over the life of those loans and the bank would progressively stop writing new business for auto loans, with customers instead able to use the bank’s Consumer and Business lending products to help buy motor vehicles.
The understanding around the industry is that Westpac would have sold the entire unit but parts were difficult to shift from its systems.
It is believed at the time that Westpac reaped about $400m from the sale.
Sources believe that it is most likely the case that many of the loans have run their course, given that auto loans are usually short in duration.
It means that the likely buyer would be groups such as debt collection houses that would take on the remnants of the portfolio.
The sale came as part of a number of non-core businesses divested by the lender in recent years, including Westpac’s general insurance unit to Allianz for about $700m and its life insurance business to Japan’s Dai-ichi for $900m.
It also made efforts to sell its $1bn wealth management platform business BT Panorama, but later opted to retain the operation.
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