Pepper Money, the commercial lending wing of Pepper Ireland, has informed customers that it is to cease offering new mortgages to commercial customers here.

The company said the decision follows a strategic review and is a "response to the increasingly challenging market conditions, reduced availability of funding from wholesale lending markets and ongoing volatility and uncertainty in global financial markets brought about by the impact of Covid-19."

However, the firm's existing commercial loans will not be impacted by the decision, nor will its residential loan servicing business.

The company said it hopes to redeploy most of its team involved in commercial lending to other roles within the expanding loan servicing business.

But it added that "there may be a small number of unavoidable redundancies."

Around 470 people are currently employed in Pepper Ireland’s loan servicing business at offices in Dublin and Shannon.

The decision is unlikely to have a significant impact on Pepper Ireland’s business, as just 5% of its revenue last year came from commercial loans.

The company first launched its commercial products here three years ago and since then it is understood to have built the book to close to €200m.

It sold its residential mortgage business and portfolio to Finance Ireland in 2018 and since then has concentrated heavily on building its loan servicing business.

Last year its servicing portfolio and Assets Under Management reached €18 billion, up from €15.8 billion at the end of 2018.

This drove a 25% increase in revenues to €52.8 million.

The Competition and Consumer Protection Commission is currently examining a proposed acquisition by Link Group of Pepper’s Irish business.