AIB to reduce pension scheme shortfall with loan transfer

AIB is to use loans with a face value of €1.1bn to help reduce a shortfall in its pension scheme in a move which will also help bring it closer to its target of cutting the size of its balance sheet by €20.5bn.

The transfer — which will be completed in the coming months — will bring AIB’s total non-core deleveraging to €15.5bn, or 76% of its €20.5bn target set under the terms of Ireland’s bailout, the bank said in a statement yesterday.

The bank did not say how much of the face value of the loans would be written down under the independent valuation by pension fund trustees, but said losses were in line with the levels assumed by stress tests carried out last year.