Belfast Telegraph

Bidders line up for Ulster Bank's £1.4bn distressed loan book

By Gretchen Friemann

Ulster Bank has this week shortlisted bidders for the final stage of the race for its €1.6bn (£1.41bn) portfolio of soured home loans in the Republic.

It is understood the portfolio of distressed mortgages, which comprises about 3,600 owner-occupier loans and 2,900 buy-to-let exposures, has attracted a line-up of global private equity players - with Cerberus, Goldman Sachs, Oaktree and Lone Star all displaying interest in the assets.

The sale is part of the lender's attempt to deal decisively with a €4.3bn (£3.78bn) overhang of problem debts.

But, John Cronin from Goodbody highlighted in a note to clients yesterday, the European Central Bank is considering a more lenient stance to lenders still saddled with high volumes of non-performing loans.

Danielle Nouy, chair of the central bank's supervisory board, said the regulator may adopt a case-by-case approach rather than press ahead with rules that would force banks to reduce their bad loans.

On Tuesday Ulster Bank's interim chief executive Paul Stanley told the Republic's Oireachtas finance committee that the bank intends to complete a sale by the end of the year.

He declined to reveal the book value of the loans, but said 73% of the owner-occupier mortgages first entered arrears seven to nine years ago while 75% of the buy-to-let exposures have been in arrears for "more than 12 months during their lifetime".

While Mr Stanley declined to offer much detail to the committee, sources said the bank pushed ahead with the sale this week, selecting a handful of contenders for second round bids.

Mr Stanley also told the committee that Ulster Bank, which is controlled by Edinburgh-based Royal Bank of Scotland, may resort to further loan portfolio sales within the next two years and expects to reduce its stock of non-performing loans to the EU average by 2020.

Ulster Bank was unavailable for comment.

The decision to offload home loans comes in the wake of Permanent TSB's controversial sale of distressed mortgages.

Belfast Telegraph

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