Tuesday 11 December 2018

GS-Pimco close in on Danske loan deal

Danske’s Irish headquarters in Dublin
Danske’s Irish headquarters in Dublin

Gretchen Friemann

Goldman Sachs and Pimco are set to finalise the acquisition of Danske's €1.8bn retail book later this week in what represents the most significant sale of performing loans since the crash.

The deal also marks the end of the Danish bank's long-running overhaul of its Irish operations, and leaves the lender focused solely on its institutional and corporate clients.

Danske's decision to sell the portfolio of performing loans was first reported by the Irish Independent, as was the likely winning bid from the two heavyweight US institutions.

It is understood a formal sale agreement has yet to be concluded, although sources said contracts are expected to be signed later this week.

Goldman Sachs, which staged a late entry into the race, and Pimco offered close to 95c in the euro for the book of loans, made up mostly of low-growth tracker mortgages.

The consortium out-muscled Bank of Ireland - the sole Irish lender to submit a bid - along with Elliot Management, the hedge fund founded and led by billionaire Paul Singer, and UK insurer Prudential.

GS-Pimco are predicted to securitise the portfolio, taking advantage of growing investor appetite for euro-denominated residential mortgage backed securities. It is understood the bulk of the funding for the acquisition will flow from Pimco, which manages about €1.6trn in assets worldwide.

Danske's performing loans offered a rare opportunity for the Irish banks to grow their bank books but sources said the high volume of tracker mortgages deterred Permanent TSB and AIB. Danske declined to comment.

Irish Independent

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