Wednesday 24 October 2018

Ulster Bank shortlists bidders for €1.6bn distressed mortgage book sell-off

Ulster Bank has shortlisted bidders for the final stage of the race for its €1.6bn portfolio of soured home loans. Photo: PA
Ulster Bank has shortlisted bidders for the final stage of the race for its €1.6bn portfolio of soured home loans. Photo: PA

Gretchen Friemann

Ulster Bank has shortlisted bidders for the final stage of the race for its €1.6bn portfolio of soured home loans.

It is understood the portfolio of distressed mortgages, which comprises about 3,600 owner-occupier loans and 2,900 buy-to-let exposures, has attracted a line-up of global private equity players, with Cerberus, Goldman Sachs, Oaktree and Lone Star all displaying interest in the assets.

The sale is part of the lender's attempt to deal decisively with a €4.3bn overhang of problem debts. But, as John Cronin from Goodbody highlighted in a note to clients yesterday, the ECB is considering a more lenient stance to lenders still saddled with high volumes of NPLs.

Danielle Nouy, chair of the central bank's supervisory board, said on Tuesday that the regulator may adopt a case-by-case approach rather than press ahead with rules that would force banks to reduce their bad loans.

On Tuesday, Ulster Bank's interim CEO Paul Stanley told the Oireachtas Finance Committee that the bank intends to complete a sale by the end of the year.

He declined to reveal the book value of the loans, but said 73pc of the owner-occupier mortgages first entered arrears seven to nine years ago while 75pc of the buy-to-let exposures have been in arrears for "more than 12 months during their lifetime".

While Mr Stanley declined to offer much detail to the committee on the sale, sources said the bank pushed ahead with the sale this week, selecting a handful of contenders for second round bids.

Mr Stanley also told the committee that Ulster Bank, which is controlled by Edinburgh-based RBS, may resort to further loan portfolio sales within the next two years and expects to reduce its stock of non-performing loans to the EU average by 2020. Ulster Bank was unavailable for comment.

The decision to offload home loans comes in the wake of Permanent TSB's controversial sale of distressed mortgages.

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