AIB seeks ‘ethical’ buyers for non-performing loans

AIB will seek expressions of interest from "ethical" finance houses and charities for a sale of family home mortgages worth hundreds of millions of euros.

The bank, which is 75 per cent owned by the taxpayer, is weighed down by non-performing loans secured on primary homes, but any sale to a so-called vulture fund would provoke significant political backlash for the bank and the Government.

Therefore, the bank has decided to approach alternative entities it sees as having the potential to purchase the loans.

Prospective buyers are thought to include mortgage campaigner David Hall’s iCare Housing, which is registered as a charity; Home4Life, a company established to use the State’s expanded mortgage-to-rent scheme; and the Phoenix Project, which is backed by investor Arizun.

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Arrow Global, the UK debt investor which is being advised by Department of Finance's former secretary general John Moran, is also likely to be interested in the proposal. The expression of interest is likely to issue in the next fortnight, but could be sent out as early as Wednesday.

The common theme among the prospective buyers is that they would keep those whose mortgages they purchase in their homes.

Another loan book sale

Separately, the bank is moving ahead with another loan book sale, although family home loans are not included in the deal, which has been code-named Project Alder.

AIB, advised by KPMG, is likely to officially launch the process in the next three to four weeks, with a sale planned by the end of the year. Between €800 million and €1 billion in loans were earmarked for the sale, sources said.

In a statement, AIB said it had reduced non-performing exposures (NPEs) “from €31 billion in 2013 to €4.7 billion. The vast majority of the reduction in NPEs has been achieved through working with customers. We remain focused on reducing non-performing loans to more normalised levels.

“Supporting customers in difficulty remains a key priority for AIB and, where feasible, we will continue to implement sustainable solutions for customers who engage with the bank on a case-by-case basis.

“AIB is acknowledged as having the widest range of customer solutions in Ireland, including mortgage to rent and our joint initiative with iCare Housing, a not-for-profit approved housing body. We continue to explore other options which could enhance the solutions available to our customers.”