Belfast Telegraph

Ulster Bank loans sold to US investor for over £200m

By Margaret Canning

Ulster Bank has sold Northern Ireland property loans originally worth £1.4bn for £205m in a deal with investment firm Cerberus, it announced last night.

Loans originally taken out by Carvill Group on the Sirocco Works in east Belfast and by Leaside Investments for the proposed Royal Exchange shopping centre in the city are believed to be part of the massive deal - expected to mark the final sale by Ulster Bank of toxic property assets in the province.

It also significantly increases the share of Northern Ireland's property market held by US investor Cerberus - which last year swallowed up the portfolio of Northern Ireland debtor loans held by the Republic's bad bank Nama, in a deal of around £1bn.

Parent company Royal Bank of Scotland announced the latest deal with Cerberus to the London Stock Exchange last night.

Its statement said: "The Royal Bank of Scotland Group plc (RBS) announces the agreement to dispose of a further portfolio of loans to an entity affiliated with Cerberus Capital Management, L.P.

"The disposal of this portfolio represents the final material transaction for RBS Capital Resolution (RCR) in Northern Ireland."

RBS said it would receive consideration of £205m for the deal, which is set to complete next month.

The statement added: "The disposal proceeds will be used for general corporate purposes."

Royal Bank of Scotland received a 84% bail-out from the UK Government at the height of the financial crisis in 2008. Since then it has been under pressure to get rid of toxic property assets which have weighed on its profitability.

RBS even considered selling Ulster Bank, the subsidiary most hampered by property debt.

But the improving Irish economy has led to Ulster Bank staying in the group.

The statement last night continued: "This transaction forms part of the continued reduction of assets in RCR and is in line with the bank's plan to strengthen its capital position and reduce higher risk exposures."

The assets resulted in a loss of around £16m in the year to December 31, 2014.

And disposing of the portfolio is expected to mean a loss of £5m after costs associated with the transaction.

The Sirocco Works is the latest high-profile site in Belfast to be affected by a loan sale. Warrenpoint-based builders Carvill Group had planned a major redevelopment of the site before falling victim to the crash.

Last year loans associated with the Merchant Hotel were sold by Ulster Bank to Goldman Sachs as part of Project Achill.

And loans linked to property in the Titanic Quarter were sold to US investment management firm Davidson Kempner.

Ulster Bank announced this year that it had returned to profit during 2014 after around five years of crippling losses.

The bank made operating profits of £606m across the island.

Belfast Telegraph