AIB said on Monday that it has agreed to sell a €1 billion portfolio of non-performing loans, consisting of mostly buy-to-let properties, to US private equity group Cerberus.
The portfolio, which consists of 2,200 customer loans, is being sold to Everyday Finance as part of a consortium arrangement with Everyday and affiliates of Cerberus Capital Management. The portfolio is predominantly made up of investment properties, with limited agriculture exposure, with an average balance of €500,000 across 5,000 assets. However, for 10 per cent of the loans, the family home has also been included, "as it is cross-secured to wider commercial connected debt" the bank said. The portfolio excludes performing restructured customer loans. AIB said it will now contact impacted borrowers to inform them that their loans are being transferred, and to confirm existing legal and regulatory protections remain in place.
“This is another important step in our non performing exposure (NPE) deleveraging strategy and we remain on track to reach c. 5 per cent by end 2019,” the bank said.
The loan portfolio has a gross non performing exposures (NPE) value of € 1 billion and a fully loaded risk weighted assets position of € 0.75 billion. The loan portfolio incurred a loss of €11 million in the year to December 2018.Once the deal is completed, AIB will receive cash consideration of approximately € 0.8 billion, and the bank said that it will use the proceeds for general corporate purposes including the continuation of support for customer restructuring.
From 2013 to end-2018, AIB has reduced NPEs from € 31 billion to € 6.1 billion. AIB said that over 90 per cent of this progress was achieved through case by case restructuring and working with customers to rightsize sustainable debt based on customer affordability. It wants to see NPEs at a more “normalised level” and said it is on track to reach about 5 per cent by end-2019.
