AIB loan portfolio sale includes ‘limited agriculture exposure’

AIB has today (Monday, April 1) announced the sale of a non-performing loan portfolio worth €1 billion, which includes “limited agriculture exposure”, according to the bank.

AIB Group has agreed to sell a non-performing loan portfolio to Everyday Finance as part of a consortium arrangement with Everyday and affiliates of Cerberus Capital Management.

In a statement issued by the bank, AIB said: “This is another important step in our non-performing exposure (NPE) deleveraging strategy and we remain on track to reach approximately 5% by the end of 2019.

“The loan portfolio has a gross NPE value of €1 billion and a fully loaded risk weighted assets position of €0.75 billion.”

The bank noted that the loan portfolio incurred a loss of €11 million in 2018, adding that, through the sale, AIB will receive cash consideration of approximately €800 million.

“The proceeds will be used for general corporate purposes including the continuation of support for customer restructuring.

“The conclusion of the transaction will be capital accretive,” the statement added.

The portfolio consists of approximately 2,200 non performing customer connections, with around 95% of connections non performing for over two years, and 80% of connections non performing for more than five years, according to AIB.

The portfolio is predominantly underpinned by investment asset properties. It also includes limited agriculture exposure, the bank confirmed.

The average balance per customer connection is €500,000 and the portfolio extends across about 5,000 assets.

While not categorised as a principal dwelling home portfolio sale, for approximately 10% of customer connections, home property has been included “as it is cross-secured to wider commercial connected debt”.

“In all of these cases, extensive and renewed efforts were made by AIB to engage with the customers, resulting in some customers being excluded where they availed of the opportunity to be restructured,” the bank stated.

The portfolio excludes performing restructured customer connections.

The bank has urged customers in arrears to engage to reach solutions, including an Enhanced Mortgage to Rent option.

AIB continued to restructure connections during the sales process. This, along with significant engagement and business as usual activity, led to an approximate €500 million reduction of potentially in-scope customer connections, the bank has said.

AIB has said it will now contact impacted borrowers to inform them that their loans are being transferred.