Sunday 26 October 2014

Lloyds sells £1.47bn of 'distressed' Irish loans for 10p on pound

Published 20/11/2012 | 05:00

UK-BASED Lloyds Bank has sold a £1.47bn (€1.8bn) portfolio of Irish property loans for just 10 pence in the pound, in what's reckoned to be the biggest write-off yet by a bank selling off boom-era assets.

The sale for just £149m to Apollo Global Management was announced yesterday and followed a long-running auction.

Shares in Lloyds lagged on the London Stock Exchange yesterday in what was generally a good day of trading for British banks.

The sale will not have a material impact on Lloyds financial results because the value of the loans had been largely written down previously, the bank said in a statement.

The writedown is higher than average "because of the particularly distressed nature of these assets", the bank said.

The loans generated losses of £202m last year, Lloyds said in the statement.

It said the sale was in line with the group's strategy of "de-risking" its balance sheet and reducing its non-core assets.

Proceeds will be used for general corporate purposes.

The deal was the second Irish transaction this year for Apollo.

Contrarian

The US firm describes itself as "contrarian, value-oriented investors in private equity, credit and real estate, with significant distressed expertise".

In March it swooped in to buy MBNA's Irish credit card portfolio, which included 200,000 customer accounts with more than €650m of borrowings.

The deal secured 250 jobs at the company's Carrick-on-Shannon operation in Co Leitrim.

The credit card portfolio was bought from Bank of America by Apollo's European Principal Finance Fund (EPF), a vehicle set up in 2007 specifically to buy risky loans from struggling banks.

The latest deal follows the same pattern.

Lloyds Group inherited the loans sold yesterday when it took over Halifax Bank of Scotland in a rescue deal at the height of the credit crisis.

The bank has since pulled out of the market here, but is still selling off or winding down Irish loans. At the end of June, the bank still had £16.1bn of Irish property loans and £6.7bn of mortgages.

Irish Independent

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