AIB sells its Latvian mortgage book

Swedbank, the biggest lender in the Baltics, has bought AIB’s mortgage portfolio in Latvia, growing its business at a time when most European lenders are deleveraging.

Sweden’s well-funded, highly-capitalised banks are seen as well-positioned to benefit from tougher conditions for some of Europe’s ailing lenders.

Swedbank did not state how much it paid for the mortgages of some 800 AIB clients, saying yesterday that it paid a competitive price for a “performing portfolio”.

AIB entered the Latvian market in 2008 when it purchased mortgage lender AmCredit from the Baltic-American Enterprise Fund. Its mortgage loan portfolio made up about 0.5% of the total mortgage market in the Baltic nation, BNS, a local news wire service, said.

AIB was effectively nationalised by the Government in 2010 after losses sustained following the property crash.

Latvia went through a deep recession in 2008-10, with the economy shrinking by 18% in 2009 after its own property bubble burst, leading to major credit losses for Swedbank during the downturn.