AIB sells €1bn of bad loans in huge offload
THE State-owned AIB has pushed ahead with a €1bn sale of bad loans that controversially includes around 200 family home mortgages as well as thousands of buy-to-lets.
The bank concluded the sale of so-called non-performing exposures to US fund Cerberus for around 80 cents in the euro.
The portfolio consists of loans linked to 2,200 customers and 5,000 assets.
The collateral is mainly buy-to-let and investment properties but includes some farm land. In around 10pc of cases the mortgage on borrowers' family homes is included because it "is cross-secured to wider commercial connected debt", AIB said.
The sale excluded restructured deals where the borrower has kept up with their new payments
The average debt among the borrowers is €500,000.
The loans were bought by Everyday Finance, an affiliate of Cerberus Capital Management, one of the most prolific investors in Irish distressed debt since the crash.
The sale is the first time AIB has included customers' soured home loans in a portfolio sale but follows a precedent set by Permanent TSB.
Around 95pc of the loans have been non-performing for over two years, and 80pc of the debt has not been serviced in five years, AIB said.
Largely State-owned AIB pressed ahead with the sale despite proposed legislation going through the Dáil that will restrict such sales. The Sinn Féin-backed 'No Consent, No Sale' Bill is intended to give borrowers a veto over their mortgage being sold.
However, AIB, like all Irish lenders with big stocks of bad boom-era loans, is under pressure from European regulators to clean up its balance sheet fast.
The bank said it is on track to cut the share of its total lending made up of bad loans to 5pc by the end of 2019.