KBC Bank Ireland completes sale of €1.1bn in non-performing loans

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Ellie Donnelly

KBC Bank Ireland has finalised the sale of its roughly €1.1bn of non-performing Irish loans to a US-headquartered investment manager in a further step towards its exit from the Irish market.

The mortgages have been sold to funds managed by CarVal Investors. Following the deal, Pepper Finance will manage the loan portfolio.

The portfolio is made up of mainly private homes and buy-to-let loans.

KBC Bank Ireland contacted the customers whose loans are included in the sale beforehand to inform them their loans were being transferred, according to a statement from the bank.

Impacted customers “will continue to have the same legal and regulatory protections (for example, under the Consumer Protection Code (CPC) and the Code of Conduct on Mortgage Arrears (CCMA) after the sale,” KBC said.

The deal was first announced last August.

CarVal Investors has approximately $11bn in assets under management in corporate securities, loan portfolios, structured credit and hard assets.

Australian-headquartered Pepper entered the Irish market in 2012 after buying GE Capital Woodchester Home Loans. This included around 3,500 Irish mortgage accounts, with over €600m in receivables.

At the time, Pepper also assumed responsibility for servicing GE Capital’s Irish portfolio of personal, small enterprise and auto loans.

Bank of Ireland is set to acquire KBC’s €9bn portfolio of performing loans after the two signed an agreement last April.

KBC Bank customers’ are likely to see their mortgage shift to Bank of Ireland late 2022 with the process to be completed by December this year.

Ales Blazek, chief executive of the Belgian banking group’s Irish arm, told an Oireachtas committee in December the transfer should happen in the fourth quarter of 2022, pending the expected conclusion of a Competition and Consumer Protection Commission probe in the first half of this year.

The bank’s parent, KBC Group, reported a €601m profit for the third quarter of 2021, including a €319m loss in its Irish arm due to the sale to Bank of Ireland.

The loss includes a one-off impairment charge of €170m and €81m in staff costs.