AIB to take €1.4bn hit on extra batch of loan transfers
AIB could take a hit of as much as €1.4bn on the extra batch of lower value loans it is transferring to NAMA.
The news follows the weekend announcement that Nama will take on an extra €16.6bn of land and development loans from AIB and Bank of Ireland.
On Monday, the Central Bank said that AIB and BoI would take a combined hit of €1.4bn when the remaining loans were transferred across.
BoI believes it will take no additional hit since the bank has already taken substantial provisions on the extra Nama-bound loans.
AIB has not yet been told the discounts it faces and declined to comment last night. The bank is understood to accept, however, that it will face some additional mark-down on the extra loans.
The Irish Independent understands that the €1.4bn hit will be borne almost entirely by AIB.
This hit partially explains why AIB's additional capital demand of €5.3bn is so much higher than the extra €2.2bn required by BoI.
A spokesman for Nama declined to comment on the likely discounts, stressing that the valuation methodology for the loans was "currently under consideration".
He added that Nama was "confident" it would be able to transfer the extra borrowers over in groups rather than on a loan-by-loan basis, as was done for larger loans.
News of AIB's Nama hit came as the bank released a stock market announcement on its latest capital demands, confirming the figures set out by the Central Bank on Sunday.
While BOI said it "intends" to raise capital from private sources and IL&P said it would not need state support, AIB acknowledged the State would "subscribe for the incremental capital requirement that AIB does not raise from other sources".