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Bank of Ireland sells €350m of non performing home loans

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Francesca McDonagh CEO of Bank of Ireland. Photo: Fergal Phillips

Francesca McDonagh CEO of Bank of Ireland. Photo: Fergal Phillips

Francesca McDonagh CEO of Bank of Ireland. Photo: Fergal Phillips

Bank of Ireland has sold €344m of Irish mortgages via a securitisation in a deal that will cut its stock of bad loans to 5.3pc of total lending. 

The bank said the deal will not affect the rights of individual borrowers and said customers will not need to take any action.

The mortgages are predominantly secured on owner occupied and buy-to-let investment properties that have been in arrears at some point.
The portfolio has a gross carrying value of €344m, which would indicate that the face value of debt involved is higher.

The deal will increase Bank of Ireland’s regulatory capital, potentially helping boost future lending but will reduce the bank’s interest income by €5m a year.

The changes for borrowers look set to be very limited. Bank of Ireland will continue to maintain

the mortgages and related customer relationships, but the debt will be shifted off the bank’s balance sheet.

Any restructuring arrangements agreed between Bank of Ireland and a customer including any alternative repayment arrangements, will not be changed by the transaction. There is no change to the protections currently afforded to customers under the relevant Central Bank of Ireland statutory codes of conduct, including the Code of Conduct on Mortgage Arrears and Consumer Protection Code.
The sale comes as Bank of Ireland prepares for a takeover of KBC Ireland’s around €10bn Irish mortgage book, though in that case again the Irish bank only intends to take on performing debts so any bad loans KBC holds will be sold separately.

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