KBC Bank Ireland sells €1.1bn loans portfolio to private equity giant CarVal

CarVal to acquire non-performing loans as bank advances plans to exit the Irish market

The bank said there will be no immediate changes for customers with KBC planning to contact those affected by the deal before the transaction is completed. Photograph: Nick Bradshaw

KBC Bank Ireland has sold a €1.1 billion portfolio of non-performing mortgage loans to funds managed by US private equity giant CarVal.

Upon completion of the transaction, the loans will be managed by Pepper Finance Corporation. KBC said consumers will continue to have the same legal and regulatory protections as they currently do following the sale.

The bank said there will be no immediate changes for customers with those affected by the deal to be contacted before the transaction is completed.

The portfolio consists of home and buy-to-let mortgages as well as a small number of non-mortgage loans.


KBC Group chief executive Johan Thijs said the sale allows the bank to "clean up" its portfolio of legacy loans, and further reduce its non-performing loans ratio.

The portfolio being sold represents “substantially all” of its remaining non-performing mortgage loan portfolio, KBC Bank Ireland said.

The bank, which entered the Irish market in 1978 by acquiring Irish Intercontinental Bank (IIB), was forced to inject €1.4 billion into the unit during the financial crisis to keep it afloat as loan losses spiralled. It has only managed to claw back a little over €400 million of the rescue funds.

As of the end of the first half of 2021, KBC Bank Ireland’s non-performing loans portfolio represented 12.8 per cent of its entire loan book, having declined in size by 6 per cent during the first half to €1.34 billion.

KBC Bank Ireland returned to profit in the first half of the year, even as the Belgian-owned lender advanced plans to exit the Republic.

The bank earlier this month announced a €21million net profit for the first six months of 2021 as loan impairment charges fell to zero. KBC Bank Ireland made a loss of €58 million for the same period last year, driven by a €95 million loan charge the bank took as it braced itself for a spike in bad loans as a result of Covid-19, a scenario that has yet to materialise.

The company revealed in April that it was in talks to sell its €9 billion performing loan book, almost entirely comprised of mortgages, to Bank of Ireland.

“I’m confident that the agreement we have signed for the sale of substantially all of the remaining non-performing mortgage loan portfolio, and with Pepper managing the loans post completion, offers a good and sustainable solution for our non-performing mortgage loan customers,” said KBC Bank Ireland chief executive Ales Blazek.

“We can assure that any customers whose loans are included in the transaction will continue to be afforded the same legal and regulatory protections. Pepper is a well-established player in the Irish market. Affected customers will be contacted shortly regarding concrete steps related to them,” he added.

Charlie Taylor

Charlie Taylor

Charlie Taylor is a former Irish Times business journalist