IRISH BANK Resolution Corporation, formerly Anglo Irish Bank, chose not to sell almost a tenth of the Anglo US loan book over fears that customers would sue the bank if it proceeded to sell their loans.
The State-owned bank will retain a small staff at the lender’s Boston office to manage about $1 billion (€750 million) in US loans as part of the long-term wind-down of IBRC’s wider operations.
About 11 of 91 performing loans in the former Anglo US book were withheld from the recent sale of the loan book as the bank required the approval of performing customers before selling the loans.
Some of the customers sought a reduction on the sum due on the loans as a condition of their approval but the bank refused.
US bank Wells Fargo purchased the other performing loans within the $9.65 billion loan portfolio where customers agreed to have their debt acquired from IBRC.
JP Morgan and Texan hedge fund Lone Star picked up the sub- or non-performing US loans. There was no issue in the sale of non-performing loans as IBRC could move against debt in default.
Some performing US loans still on IBRC’s books are not due to be repaid until 2015, which will allow the customers time to refinance or repay the debt. Three performing loans remaining at IBRC account for $650 million of debt and the bank is expected to resolve these loans by the end of April.
One retained loan is the debt on the landmark Apthorp apartment block on the Upper West Side in New York where former residents include actor Al Pacino and TV presenter Conan O’Brien. The bank was sued in September over the proposed sale of the loan tied to the “condominium conversion” which sought to redevelop and sell on apartments in the building.
The company behind the conversion, Apthorp Associates, said that IBRC had to maintain at least a 51 per cent interest in the $385 million loan on the property, the redevelopment of which has been plagued with legal wrangling.
IBRC sold loans with a face value of $8.6 billion for a discount of close to 80 cent in the euro, a better-than-expected result given the turmoil in financial markets.
The loan sale netted the bank about €5 billion in cash, which has been used to reduce the bank’s reliance on central bank funding.
The sale proceeds also helped the bank to repay the controversial €1.25 billion debt to senior unguaranteed, unsecured bondholders of the bank last week.
IBRC, meanwhile, will decide on the future of its wealth management unit in the coming weeks.
The bank is considering whether to sell the business which contains about €2.5 billion of debt or to run it down over time.
Bidders reportedly include Lone Star, Fortress, GI Partners, Prescient and a joint offer from Deutsche Bank and Key Capital.
