AIB open to selling some of its €3bn of bad loans to not-for-profit investors
AIB says it is open to selling some of the as much its €3bn of bad loans potentially up for disposal to not-for profit investors instead of vulture funds.
The bank may sell up to €3bn of customer loans to reduce its stock of bad loans to 5pc of total lending by the end of this year, AIB chief executive Colin Hunt told the Oireachtas Finance Committee.
AIB, along with other lenders has been set a target by European regulators to ultimately get the stock of bad loans to the European average, which is around 3.5pc of all lending.
The sale of so-called NPLs (non-performing loans) have proved to be hugely controversial, prompting the Dáil to back a private members’ bill proposed by Sinn Féin Pearse Doherty that will require mortgage holders to give express consent before their loan is sold to a vulture fund.
AIB’s chief customer and strategic affairs officer Jim O’Keeffe told the Committee that the bank is currently looking at the feasibility of arranging a distressed mortgage sale to a not-for-profit investor, as an alternative to the controversial vulture fund sales that have dominated such portfolio sales. He declined to comment on any specific plans or vehicles the bank is engaged with.
In his opening address to the Committee Dr Hunt said the high level of defaulted loans here is a factor in driving up mortgages costs for Irish borrowers.
“It is also true to say that those individual customers who do meet their loan repayments are, in effect, negatively impacted by those who don’t repay.”
Two weeks ago AIB announced a €1bn sale of bad loans that for the first time, for AIB, included around 200 family home mortgages as well as thousands of buy-to-lets. The loans were sold to US fund Cerberus.