Tuesday 19 November 2019

AIB and Bank of Ireland vie for Danske's €2bn loan book

Thomas Borgen, Danske Bank
Thomas Borgen, Danske Bank

Gretchen Friemann

Prospective bidders for Danske's €2bn retail book have submitted offers for the portfolio as the Danish lender races to cast off its last, large-scale legacy asset by this autumn.

According to sources, Bank of Ireland and AIB have both submitted bids and are viewed as key contenders.

Permanent TSB also cast an eye over the book but the relatively high volume of tracker mortgages is understood to have deterred the lender, which continues to hold the biggest exposure in the market to these variable-rate home loans.

The sale, which was revealed by the Irish Independent last month, is on course to rank as the largest portfolio deal this year.

It is understood that Bank of America Merrill Lynch is fielding offers, with the pillar lenders among the key contenders.

Private equity firms have also expressed an interest, with sources claiming that the two non-bank mortgage lenders, Dilosk and Pepper, ran a ruler over the portfolio.

However, it is unclear whether either submitted a bid.

It is understood that both Dilosk and Pepper can secure backing from third-party partners for prospective large-scale portfolio acquisitions.

But KKR's $500m (€437m) tilt at Pepper Group - the private-equity behemoth tabled an offer for the Australian-listed company last Wednesday, priced at A$3.60 (€2.40) per share - may have halted any expansionary moves in its offshore markets for the time being.

Bank of Ireland is seen as the chief contender for the Danske book, partly because in 2015 it snapped up a €274m portfolio of over 1,000 performing commercial loans from Danske that spanned small and medium enterprises, the agricultural sector and commercial real estate.

However, there are diverging views on the strength of AIB's appetite.

AIB has tightened its grip on the mortgage sector and now outstrips BoI as the biggest player on the block.

While AIB has plenty of capital, some question whether it will pay for growth by buying a large portfolio of mortgages, when its loan book looks poised to expand once more.

The Danish bank, which entered the local market with the acquisition of National Irish Bank, pulled down the shutters on its personal and business-lending operations in October 2013 after nursing substantial losses in the wake of the financial crash.

The Danish lender re-orientated its Irish arm towards corporate and institutional clients, but retains a significant business in Northern Ireland.

This week, it agreed a deal to sell its Northern Ireland wealth-management business, which manages just over 1,000 accounts, to the Dublin-based Davy Group

Irish Independent

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