Business Irish

Tuesday 21 November 2017

Cerberus swoops to buy up Ulster's problem loans

RBS ceo Ross McEwan
RBS ceo Ross McEwan
Donal O'Donovan

Donal O'Donovan

Ulster Bank has sold its €2.5bn 'Project Oyster' book of problem loans to Cerberus - the buyer of Nama's controversial Northern Ireland portfolio.

The loans sold by Ulster Bank include more than 900 family mortgages, which are all in deep arrears.

The total sale by Ulster Bank is made up of distressed business loans (71pc), buy-to-let mortgages (19pc) and the owner-occupier mortgages (10pc).

Some 88pc of the total is in the Republic, with the rest in the North.

The sale came as Ulster Bank parent RBS was accused of exploiting some vulnerable business customers in Britain after the Crash in a so-called "dash for cash". The UK bank tried to secretly profit by swooping in and buying assets cheaply from struggling businesses, according to leaked documents seen by the BBC.

RBS said yesterday that it had let some customers down in the past but said it did not set out to bring them down.

Back in Ireland, it's thought the loans sold to Cerberus went for a steep discount.

"Ulster Bank has confirmed the completion of a sale of a significantly impaired loan portfolio enabling the bank to strengthen its balance sheet for the benefit of its customers and provide much needed competition in the Irish banking market.

"The loans involved are all in Ulster Bank's Problem Debt Management unit and have been in arrears or under specialist management for a significant period of time," the bank said.

It added that it will now begin contacting customers whose loans have been sold.

All of the loans sold are in steep arrears, and the home loans affected are already all the subject of legal moves to have the property repossessed, the bank said.

Earlier this month Ross McEwan, the chief executive of RBS, insisted that the lender has a right to make a recovery from problem loans if it can, even by selling the debt.

"Where people have a non-performing loan I think a bank has the right to actually take some action to get that money back in one way or another," he told the Irish Independent.

The alternative is for compliant customer to prop up those in arrears, he said. For the bank, the push is to clear the decks and release capital to support growth, he said.

Irish Independent

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