AIB hires Grant Thornton to advise on problem loans

AIB is believed to have hired accounting firm Grant Thornton as a consultant to advise on a wide range of issues relating to its large book of problem loans. The bank is currently considering selling some of its portfolio of buy-to-let mortgages, which has significant arrears, although it is understood that a final decision has not yet been made.

It is understood that Grant Thornton won the role in a tender that included Big Four firms KPMG, PwC and EY.

The firm will have a wide-ranging role to advise on possible solutions for the resolution of residential and buy-to-let loans within the bank’s Financial Solutions Group, a segment dedicated to supporting business and personal customers in financial difficulties, including buy-to-let mortgages.

However, it is believed that Grant Thornton will not lead any loan sales process for AIB that might emerge in the near future.

No decision

AIB, which is 99.9 per cent State-owned, declined to comment on Grant Thornton’s appointment yesterday and said no decision has been made on a portfolio sale.

“We keep all options under consideration,” the bank said. “Our primary objective is to work with borrowers under stress to return their borrowings to a satisfactory position.”

Sources suggested yesterday that any move by AIB to sell problem loans would probably take place in 2017.

AIB had a portfolio of €5.4 billion in buy-to-let loans in the Republic at the end of June 2016, of which €1.9 billion were in arrears of 90 days or more. This represented a decrease of 11 per cent in the six-month period.

Arrears

Some 19.4 per cent of its buy-to-let loans were in arrears of 90 days or more, exceeding the industry average of 16.5 per cent.

AIB has arguably lagged behind other banks in this market – notably Ulster Bank, Lloyds/Bank of Scotland and Danske – in resolving its non-performing loans.

The bank finished second from bottom in the European Banking Authority’s recent stress test results, under an adverse scenario being applied to capital buffers for the 2018 financial year. This was largely blamed on its high level of non-performing loans, a legacy of the crash here in late 2008.

With an IPO of its shares planned for next year, the bank is also likely to want to take actions to clean up its balance sheet before going to the market.