Paragon buying up credit card debt

Paragon, the specialist buy-to-let mortgage lender, said one of its companies had snapped up a bundle of credit card debt from MBNA Europe Bank.

The firm is finding fertile hunting ground in banks trying to clear debt off their balance sheets.

The purchase of closed UK consumer credit card debt is expected to be worth £16.2m and will be funded from Paragon's case reserves.

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The acquisition is expected to be earnings enhancing to the company in the current financial year.

This acquisition follows a similar deal by Idem, one of Paragon's companies, to buy debt from MBNA in December last year for £55.7m.

"This is the eighth transaction by Idem Capital and brings the total investment in the current financial year up to an expected £115.7 million, resulting in the division becoming an increasingly large part of the Group's activities," said Paragon's Chief Executive Nigel Terrington.

"Idem Capital was the UK's second largest buyer of consumer loan portfolios in 2011 and we continue to see attractive portfolio acquisition opportunities with the banking and financial sectors increasingly seeking to de-leverage their balance sheets."