Bank of Ireland to buy €274m in Danske Bank loans

Bank of Ireland has agreed to buy €274m of performing commercial loans from Danske Bank as part of the Danish lender’s move to wind down its Irish operations.

Danske Bank has agreed to sell a €540m commercial loan portfolio, with Goldman Sachs agreeing to buy the remaining €266m of loans. Goldman Sachs will work with asset-management firm Pepper Asset Servicing to service the portfolio on its behalf.

The move represents Bank of Ireland’s second loanbook purchase in three months following on from the €253m IBRC residential loan book bought in December.

Bank of Ireland said the deal further demonstrates its focus on growing and developing its business and agri-sector offerings to customers.

Its portion of the loanbook comprises about 1,000 customers in the SME, agriculture, and commercial real estate sectors.

Investec Ireland chief economist Philip O’Sullivan described the move as “prudent” and said it was not in any way surprising given the lack of new lending activity in the Irish market, where total mortgage drawdowns last year were just 10% of that in 2006.

Mr O’Sullivan said Bank of Ireland would look to grow its lending reach through a mix of opportunistic and refinancing deals, as well as new lending opportunities as the economy picks up.

Mr O’Sullivan speculated that the group could be interested in buying some of Danske’s €2.3bn Irish residential loanbook given that the Danish bank is rapidly reducing its remaining Irish exposures since its decision to exit the market in 2013.