Bank of Montreal Considering Sale of Recreational Vehicle Loan Portfolio

(Added bank response to paragraph 4)

Bank of Montreal BMO.TO is exploring the possibility of selling a portfolio of recreational vehicle loans, Bloomberg News reported Tuesday, citing people familiar with the matter.

The face value of the portfolio is at least $5 billion, the report said, adding that the Canadian bank is in discussions with potential buyers, including credit arms of alternative asset managers.

The potential sale comes at a time when several banks in North America are shedding loan portfolios to strengthen their balance sheets in the face of a “higher for longer” interest rate environment.

“We cannot comment on the details of any transaction,” a Bank of Montreal spokesperson told Reuters in an emailed statement.

Selling loan portfolios, especially those that are interest rate sensitive, allows lenders to manage risk and keep credit loss provisions, or capital set aside to cover potential defaults, under control.