(Bloomberg) --Bank of Montreal is exploring the sale of a portfolio of recreational vehicle loans, according to people with knowledge of the matter.
The bank is in discussions with buyers including the credit arms of alternative asset managers, the people said, asking not to be identified discussing private information. The face value of the portfolio is at least $5 billion, some of the people said. KKR & Co. is among potential bidders, according to people with knowledge of the matter.
BMO will provide the majority of the financing backing the deal, one of the people said. Kelly Hechler, a spokeswoman for BMO, didn't have an immediate comment. A representative for KKR declined to comment.
Banks have been shedding assets as they seek to bolster their finances in the face of rising interest rates and macroeconomic uncertainty which threaten profits. BMO's Chief Risk Officer Piyush Agrawal said in December that loan sales are among levers the bank can pull to manage risk as the economic environment weakens — just as investors are putting pools of capital to work.
"There's a mutual dialogue always happening," Agrawal said on a conference call discussing earnings at that time. Such active risk management "continues and will continue through 2023."
Canada's third-largest bank by market value booked C$492 million ($358 million) in provisions for credit losses in the third quarter, as rising borrowing costs increased potential delinquencies. The firm is currently absorbing Bank of the West — an acquisition it completed in February.
In September, BMO said it was shutting its indirect retail auto finance business as the bank shifted its resources to other areas. The firm also recently announced plans to consolidate its Canadian private wealth management business into four regions down from six, a move it said would gain clients better access to its range of services.
