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Pimco vying with Irish lenders to buy Danske portfolio


The Danske portfolio consists of performing home loans and buy-to-let mortgages

The Danske portfolio consists of performing home loans and buy-to-let mortgages

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The Danske portfolio consists of performing home loans and buy-to-let mortgages

An unsuccessful bidder for the Northern Ireland portfolio of Nama has waded into the race for Danske Bank's €2bn retail book in the Republic, it can be revealed.

The move by Pimco is likely to present greater competition to the main contenders for the assets, Bank of Ireland and AIB.

Asset manager Pimco had been in the running to buy the Northern Ireland loans of the Republic's bad bank Nama before they were sold on to investment fund Cerberus in a controversial deal in 2014.

It also represents a departure from Pimco's strategy in Ireland as the funds giant has so far confined its exposure to joint ventures, most notably with property investor Tetrarch Capital.

While Pimco may have drafted in a partner for its tilt at the Danske book, sources said the firm is likely to view the investment as a financial trade.

The California-based money manager, which was thrown into turmoil three years ago following the exit of its prominent co-founder, Bill Gross, oversees $1.61tn in assets.

In June, Danske - Denmark's biggest lender - launched a formal auction for the portfolio. It's part of an effort to conclude a long-flagged exit from its retail business in the Republic in favour of a narrow focus on corporate and institutional clients.

According to sources, the bank is aiming to strike a deal by October at the latest.

Pimco declined to comment.

The Danske portfolio, which consists of performing home loans and buy-to-let mortgages, offers a rare opportunity for the Irish banks to expand their market share amid a tougher regulatory regime and a supply-constrained housing market.

It is understood Permanent TSB also expressed an interest in the portfolio in the early phase of the race. However, the Danske book contains a relatively high volume of tracker mortgages and PTSB, still burdened by a heavy load of non-performing loans, remains the largest holder of these low-growth loans.

KBC and Ulster Bank are also thought to have considered bidding on the Danske portfolio.

Yet Bank of Ireland is widely viewed as the strongest suitor, partly because it snapped up a €274m book of performing loans in 2015, consisting of over 1,000 customers in the SME, agricultural and commercial real estate sectors.

Goldman Sachs snapped up the remaining loans in the €540m tranche and there is some speculation Danske may opt to split the book in this latest sale.

At the presentation of Bank of Ireland's interim results in July, the lender's head of retail, Liam McLoughlin, described the Danish bank's portfolio as "a very interesting opportunity in the market place".

He said the bank would look at buying loan portfolios from other lenders as an alternative source of growth.

Mr McLoughlin added that Bank of Ireland has bought seven "books", or portfolios, of mortgages and loans over the past three years.

Belfast Telegraph