AIB to sell €1 billion non-performing loan portfolio

AIB to sell €1 billion non-performing loan portfolio

AIB has agreed a deal to sell a €1 billion portfolio of non-performing loans to Everyday Finance, as part of a consortium with Everyday and affiliates of Cerberus Capital Management.

The portfolio consists of about 2,200 non performing loans, with around 95% over two years in arrears and 80% over five years in arrears.

AIB said the portfolio is mainly underpinned by investment asset properties, and also includes limited agriculture loans.

But family homes have also been included in about 10% of the non-performing loans.

The bank said that “extensive and renewed efforts” were made to engage with the customers in all of the cases involved in the loan sale. It said this resulted in some customers being excluded when they decided to avail of the opportunity to be restructured.

It added that the portfolio excludes performing restructured customer loans.

AIB said the average balance per customer loan is €0.5m and the portfolio extends across about 5,000 assets.

The bank said the deal was another important step in its non-performing exposure (NPE) deleveraging strategy, adding that it remains on track to reach about 5% of total loans by the end of the year.

AIB said it had reduced its non-performing loans from €31 billion in 2013 to €6.1 billion at the end of last year.

It noted that over 90% of this reduction was achieved through case by case restructuring and working with customers to “rightsize sustainable debt based on customer affordability”.

The bank has about 1,500 staff members working with customers who are in difficulty and it repeated that its preference remains to provide solutions through customer engagement on a case by case basis.

AIB said it will receive about €800m from the sale of the loans, with the proceeds being used for general corporate purposes “including the continuation of support for customer restructuring”.

In a note, Davy said the €1 billion non-performing exposure (NPE) portfolio sale so early in the calendar year gives it confidence that AIB will achieve its 5% NPE ratio target by the end of the year.

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