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Friday 20 September 2019

Lloyds sells Irish mortgage book to Barclays

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Ellie Donnelly

Ellie Donnelly

Lloyds Banking Group has sold its Irish mortgage book to Barclays Bank for £4bn (€4.57bn).

The total amount of assets being sold is valued at £4.3bn, however £300m worth of the loans are impaired.

Last year the impaired loans generated a pre-tax loss of £40m.

The sale, which was widely expected, is in line with Lloyds's plan to become more low-risk and UK focused, the bank said.

However the move is unusual for Barclays, leading to speculation that the bank may decide to refinance the assets in the bond market.

According to Davy analysts, the price achieved is "above expectations" and continues to demonstrate the strong appetite amongst buyers for Irish assets.

Following the transaction Lloyds will have minimal exposure to the Irish market.

Lloyds said that the proceeds from the sale would be used for general corporate purposes.

The bank inherited the Irish mortgage book a decade ago as part of a UK government-engineered rescue of Halifax Bank of Scotland.

The book is tied to 22,742 properties, with owner-occupier loans dominating the portfolio, along with 4,023 buy-to-let loans.

Relatively few of the Lloyds mortgages are in arrears and most of the homes are tethered to homes in Dublin and the city's commuter belt.

This is the second Irish portfolio sale announcement this week, following AIB's €1.1bn non-performing loan sale announced yesterday, while earlier this week Permanent TSB announced that it was pulling over 4,000 split mortgages from its loan sale.

Ulster Bank also confirmed that  a sales process is now underway for mortgages with a value of €1.6bn.

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