AIB satisfied with accounting treatment on loan sale to Cerberus

Report had questioned how bank booked €140m profit on €1.1 billion sale of loans

AIB said  the €140 million gain was related solely to the sale of the loans. Photograph: Alan Betson

AIB said the €140 million gain was related solely to the sale of the loans. Photograph: Alan Betson

 

AIB says it is comfortable with the way in which it accounted for a €140 million profit on the €1.1 billion sale of a group of bad loans to US company Cerberus.

A report in the Financial Times said AIB recorded the €140 million on the loan sale after using transitional arrangements allowing the bank to shift to a new international accounting standard, IFRS 9.

The reports stated that the bank booked the profit on the loan sale but in the small print said that it had taken advantage of the IFRS 9 concession to exclude losses of €271 million, raising concerns that it may have sold the debts at a loss.

However, AIB said the €271 million provision was due to the expected lifetime losses under IFRS 9, while the €140 million gain was related solely to the sale of the loans.

“These are two separate and unrelated events and we are very comfortable with our accounting treatment of these and all related matters,” AIB said in a statement.

The bank pointed out that the transition to IFRS 9 had a minimal impact on the loans that it sold to Cerberus. It added that the gain was not related to, or a result of, the transition to IFRS 9.