Business Irish

Sunday 22 October 2017

Bank of Ireland now has €5bn in global loan assets on sale

Donal O'Donovan

Donal O'Donovan

Bank of Ireland has close to €5bn of international loan assets up for sale, after putting its €1.26bn portfolio of US real estate loans on the market yesterday. The move comes as bids for a €2.7bn portfolio of project finance loans are due later this week.

The US loans now being sold have a face value of €1.26bn and are understood to be high quality assets that financed commercial property in Manhattan, Washington DC and Boston.

Yesterday a spokesperson for the bank said it expects to appoint advisers as soon as this week to manage the US sale process.

The sale itself could take another six months, the spokesperson said.

Meanwhile, bids are due on Friday for a separate €2.7bn portfolio of project finance loans the bank is looking to sell.

The project finance loans were used to fund industrial and infrastructure construction in the UK and internationally.

Deutsche Bank is managing the project finance sale. An information memorandum and a non-disclosure agreement have been posted to a number of potential bidders, a source said last night.

The same source said Friday's deadline for bids could be expanded to allow bidders more time to read through the documentation.

A second adviser, UK investment bank Hawkpoint, is managing the sale of Burdale -- a separate UK-based lender owned by Bank of Ireland.

Burdale has a loan book with a face value of between €750m and €800m and a staff of 50.

Bank of Ireland is under orders from the Financial Regulator to sell €30bn of "non-core assets" over the next three years, including the international loans now on the market.

The plan is eventually to have just €122.50 loaned out to customers for every €100 on deposit. The bank is also trying to raise €4.2bn of cash to meet the Regulator's capital requirements.

If the bank can raise the cash from asset sales and shareholders it will avoid a takeover by the Government.

International

The sale of the US real estate business unit includes both the loans currently on the bank's books and a seven-person team.

Loans traders expect AIB to also sell some of its international loans over the coming months.

Last night a spokesman for the bank said no large portfolio is currently being marketed. Any large asset sale will be reported in advance through the stock exchange, the spokesman said.

A number of Greek and Portuguese banks are already in the market with international loan portfolios as they also try to wean themselves off government and ECB support. (Additional reporting Bloomberg)

Irish Independent

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