Monday 5 December 2016

Anglo to put its $10bn US loan portfolio on market but expects a wait

BANKS

Published 11/06/2011 | 05:00

ANGLO Irish Bank will formally put its $10bn (€7bn) US loan portfolio on the market over the coming weeks but doesn't expect to have the sale completed until the autumn.

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The news comes three months after the Irish Independent reported that Anglo had engaged consultants to carry out a loan-by-loan analysis of the US book to see how much it could sell for.

The state-owned bank believes that its US portfolio has increased in value by as much as 50pc over the last year, amid strong demand from pension funds and private equity groups for US assets in core locations.

Anglo has now resolved to put the entire $10bn portfolio on the market, but has yet to decide whether to sell all 640 loans in one lot or separately.

Sources close to the proceedings refused to be drawn on what discount Anglo would be willing to accept on the loan book, but said comparisons with recent AIB sales in the US were not valid.

AIB is accepting a discount of between 7pc and 15pc on a $1bn US commercial mortgage portfolio to private equity group Blackstone and US bank Wells Fargo.

The Anglo portfolio is much bigger and spread over a number of US regions -- a factor that triggered Anglo's decision to get a loan-by-loan valuation on the book done.

Sales process

Anglo will now begin a formal sales process, circulating information to interested parties and giving them a number of weeks to submit bids.

"The content of the bids will decide whether we're talking about one buyer, or a number of buyers," one source said.

A decision on the sale is expected to be made over the summer, with the cheque going through in "late quarter three".

Selling off the US portfolio will be a major milestone for the bank, which has been bailed out to the tune of some €29.3bn after recording losses of more than €30bn since 2009.

Funds from the sale of the US loans should see the bank lower its massive dependence on last-resort money from the Central Bank. If the US sale raises more than Anglo has pencilled in, the cost of its bank bailout could ultimately fall.

Anglo is also mulling over the future of its €10.9bn UK portfolio and is conducting a loan-by-loan review.

The situation is more complex than that in the US, since the assets involved there are different and the market conditions in the UK are not as strong.

Irish Independent

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