AIB still in talks with bidders for €240m UK loan book despite near collapse of sale
STATE-CONTROLLED Allied Irish Banks remains in discussions with bidders on the sale of a book of non-performing UK loans despite the near-collapse of the sale this week over debt pricing.
The lender is mulling offers for a £200 million (€246 million) book of 60 loans after reducing the size of the “Project Pivot” portfolio from £383 million at the time of first-round offers last July.
Property news website CoStar reported yesterday AIB had considered pulling the sale of the portfolio and managing the loans internally because offers of about 60 per cent of the face value would have led to heavy losses.
It is understood the bank is still engaging with final bidders for the loans but has made no decision on a sale. It is said to be aiming for a deal before the end of the year. A spokeswoman for the bank, which is 99.8 per cent State-owned, declined to comment on the loans.
AIB is shedding loans and other assets deemed “non-core” under plans directed by the troika of bailout lenders to shrink the balance sheets of the banks to return them to self-sufficiency.
The bank has reached 80 per cent of the deleveraging target of €20.5 billion set under the March 2011 stress tests of the banks.
The lender is on track to complete most of this deleveraging target by the end of the year, ahead of a deadline at the end of 2013 and in line with the losses estimated in the bank stress tests.
The final bidders for the AIB portfolio are: Cerberus Capital Management; a joint bid from Kennedy Wilson and Deutsche Bank; UK property company Telereal Trillium; and a hedge fund.
CoStar reported that the loans posed difficulties for private equity bidders as the portfolio included corporate loans to property companies secured by guarantees from companies, not by properties.
This would have required greater effort and expense to secure control of properties supporting the corporate loans.
Overseas buyers have been snapping up distressed foreign and Irish loan portfolios from the banks through their deleveraging.
Texas-based investment funds company Lone Star bought a €650 million portfolio of non-performing Irish commercial property loans from AIB at a discount of almost 60 per cent last month.