Royal Bank of Scotland announced yesterday that it has agreed to sell a portfolio of Ulster Bank loans in Northern Ireland to an entity affiliated with Cerberus Capital Management.
It said the disposal of this portfolio represented the “final material transaction for RBS Capital Resolution in Northern Ireland”. RCR is the UK bank’s workout vehicle for problem loans.
This would appear to be RBS drawing a line under the deleveraging of non-core assets at Ulster Bank's Northern Ireland operation relating to the global financial crash.
Cash consideration
RBS said it would receive a cash consideration of about £205 million at current exchange rates from the deal. Completion is expected in June 2015 and the sale proceeds will be used for general corporate purposes.
“This transaction forms part of the continued reduction of assets in RCR and is in line with the bank’s plan to strengthen its capital position and reduce higher risk exposures,” RBS said in a statement.
Carrying value
The carrying value of the loans at December 31st 2014 was about £205 million. The gross assets are £1.4 billion and the loans generated a loss in the region of £16 million in 2014.
RBS said the sale of the portfolio was expected to result in a loss of around £5 million after costs associated with the transaction.
RBS has been busily selling off troubled loans in Ireland. Yesterday, The Irish Times revealed that Ulster Bank had agreed the sale of Project Coney to Sankaty Advisers, an affiliate of Bain Capital.
Coney relates to loans associated with various hotel and pub assets, with the outstanding balance from these borrowings standing at €465 million.
RBS received about £1.1 billion from the sale in the first quarter of this year of Project Aran, a portfolio that involved about 5,000 assets.
