IRISH Nationwide has promised the European Commission that its €2bn residential mortgage book will be auctioned off as soon as market conditions improve.
The pledge was made in the business plan the embattled building society submitted to Brussels at the end of January, the Irish Independent has learned.
The main thrust of the business plan is to immediately auction off Nationwide's €4bn deposit book, and merge the society's remaining loans with Anglo's.
Sources have confirmed that while Irish Nationwide's commercial loans will be integrated with Anglo's, the residential mortgage book will remain separate.
"The idea is to sell it off as soon as we can," said one source. "Obviously you wouldn't get much for it now, but as conditions improve it might be possible."
Mortgage books across Irish banks have been hit with soaring arrears levels as the economic crisis has crippled householders' abilities to pay their monthly bills.
Potential buyers of Irish Nationwide's mortgage book would also be mindful of widespread fears that the residential mortgage crisis could accelerate in 2011 as the impact of the budget cuts and rising unemployment hit.
Nationwide is hoping that the European Commission will be mindful of those conditions and not force the immediate sale of the mortgage book, as some expected the commission to do.
The building society's original business plan, submitted last year, had suggested that Nationwide revamp itself as a mortgage lender and savings bank, but this met with a cool response from Brussels.
Brussels is unlikely to sanction significant new mortgage lending by Irish Nationwide over the coming years, given the massive amount of state aid the tiny society has gotten.
A spokesman for Nationwide declined to comment, pointing out that the society's business plan had not yet been approved by the European Commission.
A spokesman for the National Treasury Management Agency, which is co-ordinating the banks' restructuring on behalf of the State, also declined to comment.
A decision from the European Commission is expected over the coming weeks.
Potential buyers for the mortgage book include international players with an existing footprint here such as Ulster Bank and National Irish Bank.
By the time the mortgage book comes on the market, the bigger Irish banks may also be in new ownership and have an appetite for acquisitions.
Any sale is likely to be structured in a way that would have minimal impact on Irish Nationwide's residential mortgage customers. Banks are already running the rule over Nationwide's €4bn deposit book, which is being sold alongside Anglo's €10bn deposit pile.
The Government hopes to select a buyer within a fortnight, with Bank of Ireland, AIB and Irish Life & Permanent among the likely candidates.