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Thursday 22 August 2019

AIB confirms €1bn distressed loan sale to US giant Cerberus

AIB, headed by CEO Colin Hunt, is under pressure to reduce its bad loans
AIB, headed by CEO Colin Hunt, is under pressure to reduce its bad loans
Ellie Donnelly

Ellie Donnelly

AIB has confirmed a controversial €1bn sale of bad loans, including mortgages, to US fund Cerberus.

The sale, which was reported last week by Independent.ie, will see the portfolio acquired by Everyday Finance as part of a consortium with Everyday and affiliates of Cerberus Capital Management.

The portfolio consists of 2,200 non performing customer loans, around 95pc of which have been non perforning for over two years.

The portfolio is predominantly made up of properties, and includes limited agricultural exposure.

The average balance per customer loan is €500,000 and the portfolio extends across 5,000 assets.

Around 10pc of the loans include the family homes of customers, as the home “is cross-secured to wider commercial connected debt,” AIB said.

The portfolio excludes performing restructured customer loans.

The bank said it would be contacting impacted borrowers to inform them that their loans are being transferred, and to confirm existing legal and regulatory protections remain in place. 

The loan portfolio has a gross non-performing exposures value of €1bn and a fully loaded risk weighted assets position of €0.75bn. 

In the year to December 2018, the loan portfolio incurred a loss of €11m.

Once the sale is completed AIB will receive cash consideration of approximately €800m, with the proceeds being used for general corporate purposes “including the continuation of support for customer restructuring” the bank said.

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