United Kingdom

Details

  • Industry: Financial Services, Banking
  • Type: Press release
  • Date: 02/04/2014

Successful €20bn IBRC loan sale  

The Special Liquidators of Irish Bank Resolution Corporation Ltd, Kieran Wallace and Eamonn Richardson of KPMG Dublin, have announced the outcome of the €20bn loan sales processes in respect of two IBRC loan books
  • IBRC disposals represent half the live commercial real estate loan sales market
  • Private equity buyers clamour for opportunities to deploy large amounts of capital
  • Positive sign for expected Asset Quality Review ‘shake out’, with successful sale of entire bank’s loan portfolio within 12 months of the Special Liquidators taking  control
  • Positive signs for banks seeking to exit non-core assets

 

The Special Liquidators of Irish Bank Resolution Corporation Ltd. (in special liquidation), Kieran Wallace and Eamonn Richardson of KPMG Dublin, have announced the outcome of the loan sales processes in respect of two IBRC loan books, Project Stone comprising commercial real estate loans originating through the Irish offices of IBRC with a par loan value of approximately €9.3 billion, and Project Sand comprising mortgage lending with a par value of approximately €1.8 billion. This is the final stage in the overall loan disposal process: over 90% of the loan book, worth approximately €20bn par value, has now been sold to private equity and institutional investors (including Lone Star, CarVal Investors, Goldman Sachs, Deutsche Bank, Oaktree Capital Management, Sankaty and Apollo).

 

Andrew Jenke, portfolio solutions group partner at KPMG, who advised on the loan book disposal process, commented:

 

“The sale of almost €20bn of commercial real estate and residential mortgage loans is an important and powerful signal to the market.  Since 2008, there has been a persistent view that there simply wasn’t the liquidity to pull off deals of this scale.  However, we have found in the last five months that there has been more than ample appetite amongst private equity and institutional investors for large loan portfolios.  While the five IBRC loan portfolio disposals, which ran concurrently, equate to half of the entire live commercial real estate loan sales market, the competition for the assets was fierce.  As the European banking industry looks to the Asset Quality Review and considers the possible ramification that some banks may fail, the IBRC loan disposals show that an effective wind down can be achieved in the loan portfolio disposal market at the moment.”

 

“Overall, the process has shown that a committed and well organised seller can capture market attention and capitalise on the strong level of demand from buyers and funders for non-core bank assets, across Ireland, the UK and Europe. The European banking industry will be taking note.”

 

Jonathan Hunt, associate director in KPMG’s portfolio solutions group, who managed the five loan sales processes, added:

 

“The sales process showed us that key purchasers and their financiers are awash with liquidity and that there are very few similar opportunities for buyers to deploy capital at this multi-billion Euro scale.  We have also seen a notable increase in third party loan on loan financing from investment banks, at increasingly favourable terms, driving buyers’ pricing in the Irish and UK markets.  Accordingly, investors are looking to capitalise on a wave of loan portfolio sales over the next two years in Ireland as both state owned and non state owned financial institutions clear their balance sheets of non-core and non-performing loans.”

 

Loan sales outcome:

 

Project

 

Sold

Par value of loans

 

Evergreen

Corporate loans

84%

€2.5 billion

Rock and Salt

Commercial real estate loans originating through the UK businesses of IBRC

100%

€7.3 billion

Pebble

Commercial real estate loans

100%

€0.8 billion

Stone

Commercial real estate loans originating through the Irish business of IBRC

85%

€9.3 billion

Sand

Mortgage lending

64%

€1.8 billion

 

 

 

-ends-

 

For more information please contact:

Sorrelle Cooper, Head of the Press Office, KPMG: +44 20 7694 8527 / +44 7932 078218

Katy Broomhead, PR manager, KPMG: + 44 161 246 4623 / + 44 7824 537963

 

About KPMG:

 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.