Q: Hi 5i
Not sure if I have my facts straight on this questions, but, I Recently read that BMO is shopping/selling their portfolio of RV loans, which I think they inherited with the bank of the west deal....and that this is another red flag concerning underlying BMO profitability and negatively affecting share price., ect, ect....Is there any truth to this and in your opinion actually an additional red flag that investors need to pay additional attention to. If so how would this deal work and to what degree would you be concerned?
thx
Not sure if I have my facts straight on this questions, but, I Recently read that BMO is shopping/selling their portfolio of RV loans, which I think they inherited with the bank of the west deal....and that this is another red flag concerning underlying BMO profitability and negatively affecting share price., ect, ect....Is there any truth to this and in your opinion actually an additional red flag that investors need to pay additional attention to. If so how would this deal work and to what degree would you be concerned?
thx
5i Research Answer:
BMO is examining this. We would not automatically assume it is a red flag. Following big acquisitions it is fairly common for buyers to sell some acquired assets that are not key to its plans. That being said, the timing of such a move is hardly ideal, so it may be a small red flag that BMO wants to do it NOW, with higher rates, stressed consumers and a looming recession. It is not likely to get an ideal price. But 'exploring' is not the same as 'sold'. The face value of the portfolio is $5B, but the division is not likely overly material to the overall banks' profitability and assets ($1.1T).