Sunday 19 November 2017

Lloyds and AIB selling off their distressed property loans

Donal O'Donovan

Donal O'Donovan

European banks still have a staggering €2.4trn of 'non-core' loan assets to sell, according to new research from PwC.

Irish banks have been among the big sellers of such loans which were advanced to customers during the boom but are no longer regarded as part of a bank's 'core' future business.

In many cases that is because the loans have soured and are not likely to be repaid in full, but in other cases banks have pulled back from some types of lending, or out of overseas markets.

AIB is one of the most active sellers, including shifting property loans with a face value of €675m to US investor Lone Star last year at a price around half their face value.

The bank is currently in the market to sell its share of seven loans that are secured on a portfolio of hotels at British airports.

The AIB share of the hotel loans totals £200m, according to property specialists CoStar Finance. It says the hotels are owned by Arora Hotels and that the sale is being managed by Citigroup for AIB.

Meanwhile, Lloyds Banking Group is also considering selling Irish property loans with a face value of €650m in its latest 'deleveraging' of Irish assets.

Lloyds inherited Irish loans made by Halifax Bank of Scotland when the banks were merged following the financial crisis, and has since pulled out of new lending here.

More than 90pc of the bank's €8.6bn Irish commercial real- estate loan book is impaired, according to Lloyds' own annual report.

It set a record for agreeing to the biggest discount accepted by any bank selling Irish loans when US buyer Apollo paid just 10 cent in the euro for €1.8bn of Lloyds Irish loans last November.

Irish Independent

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