AIB sells non-performing buy-to-let loans to Goldman Sachs for €200m

AIB has sold a large portfolio of non-performing buy-to-let property loans to Goldman Sachs for about €200 million, roughly half the original face value of the mortgages.

The loans were connected with about 1,200 borrowers, many of them in receivership, and had an original gross value of around €400 million.

Some 1,500 investment properties across the country are connected with the portfolio, which was deep in arrears. The bank plans to write to the borrowers next week to inform them of the sale. In a statement, the bank said: “AIB is contacting the impacted borrowers to inform them that their loans are being transferred and to confirm existing legal and regulatory protections remain in place.”

AIB said the sale of these loans would allow it to “focus on actively implementing sustainable solutions for customers in financial difficulties who engage with us”.

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Dubbed Project Cypress, the tender process for the portfolio sale attracted strong interest from a number of potential purchasers. This is thought to have included Cerberus, the US private equity fund that has acquired a large chunk of loans and assets from Nama in recent years.

This sale forms part of AIB’s strategy to resolve its large holding of problem loans. The quantum of non-performing loans on its books has reduced dramatically over the past three years from €28.9 billion to €9.1 billion at the end of 2016.

Mortage arrears

Like other Irish banks, AIB remains under pressure from the European Central Bank to accelerate the resolution of its mortgage arrears to more normalised levels.

“The continued reduction of these impaired loans remains a key focus for the management of AIB and of the regulator,” the bank said. AIB is widely expected to pursue other portfolio sales of impaired loans, especially as it prepares to return to a main stock market listing. This loan sale comes as AIB is being prepared by the State for an initial public offering of 25 per cent of its shares to institutional and retail investors.

Minister for Finance Michael Noonan has signalled this could happen as early as May or June with a number of financial advisors appointed over the past four months to assist the department of finance with the process. AIB received a €20.8 billion bailout from the State after the banking crash in late 2008 and is 99.9 per cent owned by taxpayers. Mr Noonan has said a sale of shares would only be contemplated if it achieves the best possible return for taxpayers.

In answer to a question from the Anti-Austerity Alliance TD Paul Murphy in February, Mr Noonan said the disposal of the Project Cypress loans would facilitate the return of many of the properties into “productive use”. He added that the rights of tenants would be protected. “In situations where there is a tenant in place their rights are not impacted by the sales process and are ultimately protected under the relevant tenancy laws, as such a tenant will avail of the same rights irrespective of whether the loan is owned by AIB or a third party,” he said.