AIB and BoI to sell off €2.5bn of assets in US market
AIB and Bank of Ireland have committed to selling off another €2.5bn worth of assets in the increasingly volatile US market as part of their massive "deleveraging" plans, the Irish Independent has learned.
But sources last night down-played the significance of the downgrade -- which was not specifically modelled in March's apocalyptic stress tests -- pointing out that the €2.5bn of US stock is just a tiny percentage of the €70bn sell-off across Ireland's continuing banks.
The US market has been the bright spot of deleveraging so far, with AIB's €1.5bn of foreign asset sales in the first half of the year believed to have included a significant amount of US disposals at better-than-expected prices.
The Department of Finance yesterday confirmed that the two pillar banks' deleveraging plans included less than €1bn of US real estate sales for Bank of Ireland and less than €1.5bn "remaining" at AIB.
BOI is "running a sales process that will be concluded shortly," the Department of Finance added. Both AIB and BOI, which is in a close period, yesterday declined to comment on whether they would push ahead with their US deleveraging as planned in light of the latest crisis.
The two banks have already submitted asset sales plans to the Central Bank of Ireland and the Department of Finance, but may have flexibility to select different assets in response to evolving markets.
"Given the size of the US market, these are relatively small amounts [that are] identified for disposal," the Department of Finance said, adding that the banks had until the end of 2013 to complete the sell-offs.
Of more immediate concern is Anglo Irish Bank's sale of its €10bn US loan book, which will attract first round bids today.
The Department of Finance said that the US downgrade had been "calibrated" into the Anglo auction process, since S&P put the US on watch in mid-April.
"The first round of bids will demonstrate the interest of potential buyers and the bank will be in a better position to assess demand at that stage," the Department added.
Big name private equity companies including Blackstone and Deutsche Bank had shown interest in the sale before the latest crisis.