AIB preparing to take hair cut of 50 per cent on group of UK loans totalling £200 million

Bank also notifies customers that it has once again taken full ownership of Ark Life

AIB Headquarters in Ballsbridge Dublin. Photograph: Bryan O'Brien

AIB Headquarters in Ballsbridge Dublin. Photograph: Bryan O'Brien

Wed, Mar 20, 2013, 22:57

AIB has placed a portfolio of seven senior loans with a par value of £200 million on the market. The portfolio, called Project River, is expected to be sold for about 50 per cent of the original value.

It is understood that Citigroup has been engaged to manage the sales process, with second round bids expected within the next month. The loans are secured by a portfolio of UK airport hotels owned by Arora Hotels, an independent chain founded by Surinder Arora in 1999.

AIB’s Project River syndicated loans are thought to include a position in the £165 million three-bank financing of a 33-strong property portfolio acquired from Airport Property Partnership (APP), a 50:50 joint venture between BAA and clients of Morley Fund Management in August 2008.

Arora financed the purchase with a £165 million senior loan from AIB, Bank of Ireland Corporate Banking and Abbey National Treasury Services, now trading as Santander.

Failed to sell
Last November, AIB failed to sell Project Pivot, another portfolio of loans. The final bids received involved steeper discounts than the stipulated reserve price of 40pence in the pound.

It had better luck a month earlier with the disposal of the €660 million Project Kildare, an Irish non-performing loan portfolio, to Lone Star at a discount of about 60 per cent.

Project Kildare comprised around 70 loans secured by an underlying collateral pool of more than 400 hotels, nightclubs, shopping centres and offices.

Separately, customers of Ark Life have been told that the assurance company is once again a wholly-owned subsidiary of AIB. This change of ownership took place on March 8th.

In 2006, AIB and Aviva entered into a joint venture for the manufacture and distribution of lief, pension and investment products. This involved Ark Life being folded into an entity called Aviva Life Holdings Ireland Ltd, in which AIB had a 24.99 per cent shareholding.

In early 2012 AIB and Aviva decided to discontinue this arrangement with Ark Life returning to being wholly owned by the bank.

Life assurance
AIB ceased its life assurance and investment product distribution arrangements with the joint venture and commenced distributing life assurance and investment products for Irish Life Assurance, which was bought recently by Canada ’s Great-Life Westco .

In a letter sent to customers on March 14th, Ark Life’s managing director Ann Kelleher said the change in ownership would “not affect the terms and conditions” of its policies.