Wednesday 13 December 2017

Ireland tops for EU bank loan sales

Donal O'Donovan

Donal O'Donovan

Ireland will overtake the UK as the biggest market in Europe for banks selling off multi-billion loan books, according to KPMG.

The new report says that almost half of the up to €42bn of loan sales expected in the six biggest European markets this year could happen here.

KPMG was forced to revise up previous estimates because the liquidation of Irish Bank Resolution Corp (IBRC), the former Anglo Irish Bank, puts billions of new assets on the market.

The liquidation means IBRC's remaining €19bn loan book must all be sold off in the next six months by liquidators Kieran Wallace and Eamonn Richardson.

Some of those loans are likely to be sold abroad, but much of the IBRC book will be "sold" to NAMA, another state-owned entity.

So called "loan portfolio" sales have become a major feature of the financial landscape since the banking crisis as lenders have hived off masses of loans, that are seen as assets by banks.

The biggest sale seen to date was by Anglo Irish Bank which off-loaded its €6.9bn of US loans in a single deal back in 2011.

AIB has also been a significant seller.

The deal that grabbed most headlines was Lloyds Group's sale of a "€1.8bn" book of Irish loans for less than 10 cent in the euro last December, a deal that must have sent shivers up the spines of executives at the other banks.

Those loans were originally advanced by Halifax Bank of Scotland Ireland and were secured on properties that have collapsed in price since the boom.

IBRC's liquidators are not the only Irish sellers in the market, NAMA is already in the market with €1.15bn of its own loan asset. Like earlier mass sales of loans, the NAMA assets are likely to be bought by US private equity houses.

Ulster Bank, owned by RBS, is selling loans but on a deal-by-deal basis rather than bundled into portfolios. Bank of Ireland has already cleared out the so-called non-core assets it wanted to sell. AIB is close to the end of its disposal projects.

Irish Independent

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