Home Knowledge Irish Banks Continue Disposals as Part of EU-IMF Bailout

Irish Banks Continue Disposals as Part of EU-IMF Bailout

January 20, 2012

In compliance with conditions imposed under the EU-IMF bailout, Irish banks continue to dispose of their non-core assets.

Bank of Ireland is reported to have reached agreement to sell its UK subsidiary Burdale to US bank Wells Fargo for €690 million. The agreement is understood to include (i) a sale of the entire issued share capital of the UK entity, Burdale Financial Holdings Limited, to Wells Fargo International Banking Corporation; and (ii) a sale of the loan book of the US entity, Burdale Capital Finance Inc, to Wells Fargo Bank NA. The price represents a discount of 0.4% on Burdale’s total loan commitments of approximately £1.3 billion and a discount of 0.8% on its total drawn balances of approximately £575 million (as at 30 November 2011). Bank of Ireland purchased Burdale in 2005 for €71 million.

Bank of Ireland has also announced the sale of a portfolio of loans relating to infrastructure and energy assets in North America and Europe to Sumitomo Mitsui Banking Corporation. It is reported that the loans are being sold for approximately €470 million (85% of their original value of €590 million).

AIB is reported to be considering the sale of a portfolio of €1.4 billion of Irish property loans, made up of €1.1 billion of commercial property loans (50% non-performing) and €300 million of residential property loans. It has not yet been confirmed whether the portfolio will be sold in one single deal or divided into a number of smaller portfolios.

AIB has also sold its investment management business, AIBIM, to the South African financial services group, Prescient Holdings. The business, which as at September 2011 had approximately €8.5 billion of assets under management, is reported to have been sold for approximately €25 – €30 million. It is to be renamed Prescient Investment Managers (Ireland) Ltd once the sale has fully concluded.

Irish Life & Permanent is reported to be planning an auction of its portfolio of buy-to-let loans valued at approximately €6.5 billion. The portfolio, known as “Project George” is backed by buy-to-let properties located in southeast England. The expected sale of the loans for as little as 60-70 cent in the euro could result in a loss of up to €2.6 billion for the bank. IL&P is also reported to be selling Permanent TSB Finance which provides car loans and financing and leasing deals for agricultural machinery. The car loan book, valued at €500 million, and the agricultural loan book, valued at €100 million, may be sold separately.

Lloyds Bank is continuing to wind down the €30 billion loan book of Bank of Scotland (Ireland). The bank has reportedly disposed of half of its specialist invoice discounting loan book to the FTSE 250 company, Close Brothers. The disposal is understood to have raised approximately €25 million for the bank. Close Brothers is reported to have plans to do further business with BoSI as the bank moves to exit the Irish invoice discounting market by March 2012.

It has also been reported that BoSI has sold car, vehicle and machinery loans to VHP Ireland, part of the US investment group Varde Partners. The price paid for the loan book, originally worth hundreds of millions of euro, has not been disclosed.