Permanent TSB to sell €2.6bn in loans

Permanent TSB Group Holdings Plc, the bailed-out Irish lender, has hired Morgan Stanley to sell its commercial real estate and subprime residential mortgage loan books, with a combined face value of about €2.6bn.

Permanent TSB to sell €2.6bn in loans

“Morgan Stanley has been appointed to sell the two portfolios,” said Ray Gordon, a bank spokesman. The loans are mainly non-performing and are valued at a discount on Dublin-based PTSB’s balance sheet after bad-debt provisions.

PTSB’s chief executive, Jeremy Masding, is slimming down Ireland’s once largest mortgage lender to show European antitrust authorities it is viable after a €4bn state rescue.

Firms such as Blackstone Group LP and Kennedy Wilson Holdings Inc are among an influx of overseas buyers.

Irish commercial real estate values rebounded almost 10% in the year through March, according to Investment Property Databank Ltd, but remain 64% below their 2007 peak.

Masding said in March the bank planned to sell its Irish commercial real estate and subprime home loans business this year, before marketing its UK residential mortgage unit. The bank had previously planned to first sell the UK operation, Capital Home Loans, with €6.7bn of loans.

“While a significant amount of the commercial real estate portfolio is impaired, it has been well provisioned,” the European Commission said of PTSB in a report on Ireland yesterday. “This should help limit the capital impact” of the sale, it said.

PTSB had set aside €911m of provisions to absorb bad debts in the €2.1bn commercial loan book on December 31, according to its annual report.

The liquidation of defunct nationalised lender Anglo Irish Bank Corporation since February 2013, with the sale of 90% of a €22bn loan book, shows that there is “strong demand” for Irish commercial real estate assets, the EU said.

PTSB’s Irish subprime unit, Springboard Mortgages, marketed as a “near-prime” lender when set up in 2006, had €466m of loans at the end of 2012, according to its most recent accounts filed with the country’s companies office.

It had set aside €147m of loan-loss provisions at the time. Springboard stopped writing business in 2009.

PTSB’s 2013 net loss narrowed to €261m from €996m as a one-time gain from winding up a defined benefit employee pension plan offset an increase in bad loan impairment charges. The group doesn’t expect to return to profit until 2017.

Ireland’s two largest lenders, Bank of Ireland Plc and Allied Irish Banks Plc, each swung back into profit in the first quarter for the first time since the financial crisis erupted in 2008 as their loan losses fell.

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