Ireland is second biggest problem loan sales market in Europe

Lenders in Ireland sold €6.2bn of loans, second only to Italy’s €6.5bn

AIB sold a portfolio of loans that had an original value of almost €3 billion to a group led by US distressed debt giant Cerberus in April. Photograph: Crispin Rodwell/Bloomberg

AIB sold a portfolio of loans that had an original value of almost €3 billion to a group led by US distressed debt giant Cerberus in April. Photograph: Crispin Rodwell/Bloomberg

 

Banks in the Republic have been the second-most-active sellers of problem loans so far this year, behind Italy, according to US investment bank Evercore.

Lenders sold €6.2 billion of loans, driven by a massive AIB non-performing loans disposal, and as Dutch lender Rabobank, which has been among overseas lenders to have retrenched from the Irish market in recent years, sold off the remnants of the former ACC Bank loan book, according to Evercore in its latest quarterly European Distressed Real Estate Market report.

Banks in Italy, the centre of the European Union’s non-performing loans problem, shed €6.5 billion of such loans so far this year, with the UK coming in at third, at €5.6 billion. Spanish and Greek lenders disposed of €4.5 billion and €3 billion in non-performing loans respectively during the first since months of 2019.

“A significant deleveraging effort was completed in 2018, with the total gross European non-core real-estate exposure reducing by circa €168 billion, or 32 per cent over the year,” said Evercore. “This was the largest annual reduction recorded since the end of 2013, driven mainly by financial entities in southern Europe.”

AIB portfolio

AIB sold a portfolio of loans that had an original value of almost €3 billion, known as Project Beech, to a group led by US distressed debt giant Cerberus in April. The portfolio, which had a carrying value of €1 billion on AIB’s books at the time of the sale, was made up of loans against 5,000 assets, mainly investment properties, but also 220 owner-occupier loans that were cross-secured to wider commercial debt included in the sale.

The 71 per cent State-owned bank is planning another non-performing loan sale later this year to lower its proportion of such loans from 7.6 per cent of total loans to about 5 per cent.

Rabobank sold its remaining €3 billion-plus former ACC Bank loans to Wall Street bank Goldman Sachs, distressed debt firm CarVal Investors and debt collection firm Cadot for a deeply discounted price of €800 million in April. ACC Bank handed back its banking licence in 2014.

Royal Bank of Scotland’s Ulster Bank, which has been among the most active sellers of non-core loan portfolios in the Republic over the past five years, announced plans earlier this month to sell €900 million of non-performing loans, including 3,200 owner-occupier mortgages and debt linked to 400 buy-to-let properties.

Permanent TSB, which offloaded €3.4 billion of mortgages last year, and Bank of Ireland has also flagged potential further loan sales.