Tuesday 21 February 2017

AIB sells on $1bn of US commercial loans to Wells Fargo and Blackstone

Published 26/05/2011 | 05:00

€24bn

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The amount of Irish banks' loans held outside Ireland, giving market confidence

AIB has agreed to sell a $1bn portfolio of commercial loans to giants Wells Fargo and Blackstone according to US reports.

Blackstone is reportedly buying its portion of the loan book at a discount of about 15pc, while the higher quality section bought by Wells Fargo carries a discount of about 7pc. A spokesman for AIB declined to comment on the reports yesterday.

The bank is reported to have sold the loans on a number trophy properties in Manhattan - one of the largest real estate markets in the US.

The news comes as stockbrokers Davy said forced sale of Irish banks' assets is likely to yield about €3bn more than the bargain-basement prices envisaged in the latest "stress tests".

The better-than-expected disposals outlook means about €3bn of the latest €24bn could be repaid to the taxpayer over the next three years, once the banks have completed their so-called "deleveraging" plans.

Davy's credit analyst Stephen Lyons confirmed the €3bn figure last night, after he told a conference of Davy clients that it was "likely" the banks would not need the full €13.2bn they've been allocated to absorb losses on asset sales.

The banks have to slim down their loan books by €70bn.

The Department of Finance has indicated that €25bn of the reduction will take place through loans being repaid back in the normal way.

After factoring in losses on about €12bn of smaller land and development loans that were once bound for NAMA, Davy believes the stress tests allow €9.5bn of losses on the remaining €35bn of assets.

This implies losses of 27pc across a portfolio that includes €24bn of non-Irish assets.

"Our view is that there is about €3bn of surplus capital here on the basis that most of the deleveraging takes place on overseas assets," Mr Lyons told the Irish Independent last night.

"Specifically, the €24bn of loans outside Ireland gives confidence, where we are only looking at a mid-single digit percentage of impaired loans," he said.

Asked when the money would be returned to the State, Mr Lyons said the Government could conceivably use its preference shares in the banks to recover the funds over time.

Bank of Ireland has to slim down its loan book by €30bn over the next three years, but expects to carry out just €10bn of actual disposals with the rest of the reduction accounted for by normal loan repayments.

The assets earmarked for disposal are mainly in relatively-healthy markets like the UK and the US and include no Irish loans.

BOI has already put UK asset finance business Burdale on the market, as well as its Global Project Finance division. Both sales are at an "early stage"

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