AIB shows no reservations about acquiring loans relating to the Savoy hotel in London

AIB is reported to have teamed up with Spanish bank Santander to acquire a £70 million loan relating to the plush Savoy hotel in London.

In a surprise move, the loans were acquired from Crédit Agricole and DekaBank, whose £200 million, five-year senior loan refinanced the Savoy hotel, which is owned by Prince Alwaleed bin Talal of Saudi Arabia and Lloyds Banking Group.

Details of the deal were reported yesterday by specialist publication CoStar News.

Surprise
This move will surprise AIB watchers as the Irish bank, which is 99 per cent owned by the State, has been in deleveraging mode for the past five years and is working through a large portfolio of problem loans.

However, it was reported that the bank has a “modest appetite” for certain hotel debt where the loan has a corporate debt-like structure.

It recently participated in a financial restructuring of the mid-market Jurys Inn hotel chain, which involved £290 million of its £650 million debt being written off by a syndicate of banks, including AIB.

AIB declined to comment on the loan yesterday.

The Savoy hotel is owned by Breezeroad, a joint venture in which Lloyds and Prince Alwaleed’s Kingdom Hotel Investments have a 50:50 stake.

The Savoy was acquired by the Saudi royal in 2005 for about £220 million from a consortium of Irish investors, led by financier Derek Quinlan.

The Quinlan group had originally acquired it as part of a deal that also included Claridge’s, the Berkeley and the Connaught five-star hotels.

The Savoy closed in mid-2007 for a refurbishment reported to have cost £230 million. It reopened in 2010.