Bank winds up LMI business

Auswide Bank Ltd announced today the effective date of 30 September 2015 to wind up its captive lenders mortgage insurance subsidiary, Mortgage Risk Management Pty Ltd (MRM).

The action will free up approximately $10 million Tier 1 capital and result in Auswide Bank being in a position of regulatory capital strength, exceeding 15 per cent.

Auswide managing director Martin Barrett said the capital return puts Auswide Bank in an enviable position allowing for ongoing lending growth in housing, consumer and business finance.

The action will provide the lender with added strength to consider acquisition opportunities and allow the board ability to consider a special dividend in due course, Mr Barrett said.

An ASX trading update today noted that the risk profile for Mortgage Risk Management continues to improve.

“Provisioning strong and will be transferred to Auswide Bank allowing for a healthy provision buffer against unexpected write offs,” it said.

Auswide Bank committed a large part of the MRM portfolio to QBE LMI in 2012 and QBE have continued to provide cover since.