Danske Bank confirms binding contract for mortgage portfolio sale

Pimco believed to be involved with Goldman Sachs on €1.8 billion Danske portfolio deal

Danske Bank has not indicated how many loans were included in the mortgage portfolio sale.  Photograph: Eric Luke

Danske Bank has not indicated how many loans were included in the mortgage portfolio sale. Photograph: Eric Luke

 

Danske Bank Ireland said on Wednesday it had entered into a binding contract on the sale of a portfolio of performing residential mortgages to an entity financed by Wall Street investment bank Goldman Sachs.

It is understood that US investment firm Pimco is also involved with the Goldman Sachs-financed entity, Proteus Funding, on the deal, which involves a €1.8 billion mortgage book.

It had previously been reported that both firms were in pole position to acquire the portfolio at 95c on the euro, with the discount reflecting the fact that the portfolio contains a large number of low-yielding tracker mortgages, where rates are linked to the European Central Bank benchmark.

A spokesman for Danske Bank declined to comment on the financial details of the transaction.

“Customers agreements are unaffected by the transfer and individual customers have been advised of the transfer by letter from the bank this week,” he said, adding that the Central Bank has been advised of the transaction.

Copenhagen-based Danske Bank entered Ireland in 2005 by acquiring National Irish Bank before deciding four years ago to exit the retail banking business in the Republic after racking up massive bad loan losses. It has since concentrated on selling down its retail portfolio.

A spokesman for the company declined last week to say how many Irish customers had been caught up in the industry-wide tracker scandal, saying the “review is ongoing”.

The loans will continue to be serviced by Australian financial services company Pepper Group’s Irish operation.

Danske Bank has not indicated how many loans were included in the transaction or the amount of non-core, or unwanted, Irish assets the bank still has to dispose of. The Danske Bank Group no longer discloses its Irish portfolio in annual or quarterly reports.

US hedge fund Elliot Management, UK insurer Prudential and Bank of Ireland had also been involved in bidding for the mortgage portfolio.