Sunday 11 December 2016

BoSI takes a further £700m hit on Irish loan book in third quarter

Published 09/11/2011 | 05:00

BANK of Scotland (Ireland) (BoSI) booked another £700m (€815m) of impairments on its Irish loans in the three months to September, but parent company Lloyds insisted there were "no particular strains" in the Irish market over the period.

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The latest whack of impairments follows some £1.78m of Irish provisions in the first half of 2011, and £4.3bn of charges in 2010 -- a significant hit on a loan book that averaged about £27bn over the period.

Asked about the latest Irish charges yesterday, Lloyds interim chief executive Tim Tookey said there had been a "slight increase in impaired loans" but that it had been "expected".

"We have actually seen no particular additional strains in Ireland [in the quarter]," he stressed, adding that the bank might be being "overly cautious" in its latest assessment.

Vulnerability

Some 68pc of BoSI's loan book is now classed as impaired, up from 64.1pc at the end of June and 53.7pc at the start of the year. The bank believes it is "well-provided", Mr Tookey said.

In a statement, Lloyds attributed the increase to "further falls in the commercial real-estate market" and admitted that "further vulnerability exists".

Against the bleak backdrop of massive losses, Lloyds found a silver lining in Ireland, with Mr Tookey saying he was "especially pleased" to have offloaded some €1bn of Irish assets so far this year.

No detail on pricing was given, but Irish loans changing hands in this market are likely to be sold at a discount. After the sales, Lloyds was left with £16.7m of commercial loans in Ireland, plus £7.4m of retail lending.

The loans are being administered by Certus, a collections company set up by former BoSI executives after Lloyds pulled out of the Irish market at the turn of 2011.

Certus has made a name for itself as a pragmatic chaser of debt, and is understood to have sanctioned debt writeoffs in limited circumstances in order to close off an account.

The debt-recovery firm recently advertised some 25 new jobs to help wind-up the BoSI loan book.

Irish Independent

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