Friday 19 April 2019

Project Beech: AIB to sign off on controversial €1bn bad loans sale to Cerberus

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Donal O'Donovan and Charlie Weston

AIB is poised to sign off on a controversial €1bn sale of bad loans including mortgages to US fund Cerberus, understands.

The sale, dubbed Project Beech, is AIB’s biggest to date and is mainly of mortgages and business loans in deep arrears. The US fund will pay around 30 cents in the euro for loans with a face value of €3bn

Sources confirmed the sale remains live and has progressed to its final stages, despites doubts in the market about the impact of Brexit and around proposed legislation that may restrict loans sales in future, has confirmed.

Cerberus has seen off competition from rivals Lone Star and a joint bid from Goldman Sachs and CarVal.

In a separate deal in May last year a consortium led by Cerberus bought AIB’s earlier Project Redwood loan portfolio – made up of bad loans including buy-to-let mortgages with a face value of €1.1bn.

AIB has driven ahead with the Project Beech sale despite push back from some bidders around the uncertainty on how Brexit will play out. The bank is on course to complete the deal this month, but may be delayed slightly. The Irish bank is selling off bad loans under pressure from regulators at European level to reduce its stock of so called non performing exposures to the Euro-area average,  which is now under 3.5pc compared to around 11pc at AIB.

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