Cerberus -Do they need a Banking Licence to operate a bank account?

PaulW922

Cerberus (and try Googling them for their latest activities in Northern Ireland and the Isle of Man!) is not acting as a deposit taker or providing banking services. So no, they don't need a banking license.

philjc

The mortgage went from being a term loan to an unauthorised overdraft when the loan was approaching the end of its term and the bank (without agreement) paid off the loan by debiting the current account by the outstanding amount, thus creating an unauthorised overdraft that has no loan agreement associated with it.

I fully understand that a loan facility can be sold OR that a bank can use a non regulated entity to collect debt on their behalf.

It is interesting that people quote other Cerberus deals because when they made a large purchase from Lloyds a few years ago they were not able to take on every loan due to complications based around the fact that they did not have a banking licence. The debt that they couldn't purchase was instead sold on to Deutsche Bank

antrobus

philjc wrote: »

...It is interesting that people quote other Cerberus deals because when they made a large purchase from Lloyds a few years ago they were not able to take on every loan due to complications based around the fact that they did not have a banking licence. The debt that they couldn't purchase was instead sold on to Deutsche Bank

That is true.

But bear in mind that, as far as the Cerberus-NRAM deal is concerned, Cerberus did not buy the loan book from NRAM plc, it actually bought NRAM plc.

What UKAR did was strip everything that Cerberus did not want out of NRAM plc into a new NRAM entity, and then transfer the ownership of NRAM plc (formerly the Northern Rock plc) to Cerberus.

antrobus

Wake_up_call wrote: »

...My understanding of asset trading is that there can be an owner of record and what is known as a beneficial owner....

That is true, because Cerberus become the beneficial owner of the loans in December 2015, but the actual sale of NRAM to Cerberus did not take effect until the 5th May 2016.

philjc

My question does not concern the NRAM deal. I am interested in why Cerberus could not buy the entire book from Lloyds and the information that I have read so far indicates that it was due to the lack of a banking licence. This leads on to the question Are Cerberus able to purchase BANK ACCOUNTS as opposed to TERM LOANS?

philjc

The terms and conditions of a Bank Account are obviously different from that of a Loan Facility. The assignment clause states that they can assign the account with all of its rights and benefits (of a bank current account)

So the question in its simplest form is

Can a business bank account be transferred to someone without a banking licence?

antrobus

philjc wrote: »

My question does not concern the NRAM deal. I am interested in why Cerberus could not buy the entire book from Lloyds and the information that I have read so far indicates that it was due to the lack of a banking licence. This leads on to the question Are Cerberus able to purchase BANK ACCOUNTS as opposed to TERM LOANS?

Lloyds sold the Project East UK hotel loan portfolio in two tranches due to complications with the loan documentation which prohibited a loan sale to a third party without a banking license for a small number of loans.These loans were sold to Deutsche Bank


http://www.costar.co.uk/en/assets/news/2013/December/Cerberus-pays-90m-for-Lloyds-Project-East-UK-hotel-portfolio-/


Maybe there were no complications with your loan documentation.

philjc

The loan was paid off before the sale and had also expired before the sale meaning there is no loan agreement. The bank were under the impression that new documents had been prepared and signed but this hadn't been done meaning that we have a current account that is overdrawn but had not loan agreement associated with it and no term. It is purely a current business account.

antrobus

philjc wrote: »

The loan was paid off before the sale and had also expired before the sale meaning there is no loan agreement. The bank were under the impression that new documents had been prepared and signed but this hadn't been done meaning that we have a current account that is overdrawn but had not loan agreement associated with it and no term. It is purely a current business account.

As far as I'm aware the answer would be as already given; that you need a banking licence to accept deposits from the public, but you don't need one to operate an account. Which presumably, would be the answer you've already got from the FCA, FOS, BBA who have given you the "run around".

Why does it matter? Are you disputing the debt in anyway?

philjc

The debt is not in dispute with Cerberus. I just want clarification of the legality of the transaction. The bank believe that they have sold the loan facility, which they cant have done because (a) its paid up (b) it expired before the sale date.