AIB hires Alantra to sell British small business loan book

CEO announced last December that the bank was exiting the British SME market

investment bankers at US financial services giant JP Morgan are advising AIB on its planned purchase of a €4 billion Irish corporate and SME loan book from Ulster Bank. Photographer: Crispin Rodwell/Bloomberg

investment bankers at US financial services giant JP Morgan are advising AIB on its planned purchase of a €4 billion Irish corporate and SME loan book from Ulster Bank. Photographer: Crispin Rodwell/Bloomberg

 

AIB has hired international boutique investment bank Alantra to sell its almost £1 billion (€1.16 billion) British small- to medium-sized business loan book as part of a cost-cutting drive announced late last year, according to sources.

Alantra has also been asked to find a buyer for some £2.8 billion of deposits associated with SME customers on the other side of the Irish Sea, though it may struggle to sell these, given how lenders globally are grappling with excess levels of customer savings.

AIB chief executive Colin Hunt told analysts last Friday, as the group reported full-year figures, that advisers had been contracted to sell the British SME portfolio. He did not identify the firm involved.

Mr Hunt announced last December that the bank was exiting the British SME market, while doubling down in corporate lending in niche areas such as renewable energy, manufacturing and warehousing in that market.

The exit from this labour-intensive segment of the market will save the bank an estimated €35 million in the coming years. The group reaffirmed its commitment to its Northern Ireland business at the time.

Separately, sources say that investment bankers at US financial services giant JP Morgan are advising AIB on its planned purchase of a €4 billion Irish corporate and SME loan book from Ulster Bank. Ulster Bank’s UK-based parent NatWest Group confirmed last month that it will be exiting Irish market in the coming years. Some 300 Ulster Bank jobs are expected to transfer with the portfolio.

Branch network

Permanent TSB (PTSB), advised by Morgan Stanley, is also in talks to buy a large portion of Ulster Bank’s €14 billion portfolio and up to €700 million of smaller SME loans.

PTSB, which has a 78-strong branch network, is also in talks to acquire at least some of its exiting rival’s 88 branches and take on a number of Ulster Bank’s current 2,200 staff, excluding temporary employees.

Meanwhile, sources said Ulster Bank has abandoned plans to proceed with 40 compulsory redundancies at the bank, stemming from a plan, announced last September, to eliminate 266 jobs. The bulk of the number had been met by way of voluntary severance.

The 40 individuals will be protected from compulsory departure until at least the end of 2021.

Ulster Bank chief executive Jane Howard said at the time that the wind-down of the bank was announced on February 19th that there would be “no new compulsory departures” from the bank lender this year.