KBC disposal ‘no signal’ it plans home loans sale

By Eamon Quinn

A decision by KBC Ireland to sell a €1.9bn bundle of loans — the first ever by KBC here — does not mark a change in policy and is not a signal it plans to sell its non-performing homes loans book, its chief executive has said.

The sale to Goldman Sachs includes non-performing (NPL) corporate and buy-to-let loans, as well as a comparatively small amount of buy-to-let loans in the UK.

Following the sale, KBC Ireland will have €2.5bn in NPLs on its books, consisting almost entirely of soured home loans.

But CEO Wim Verbraeken said the transaction should in no way be read as a signal about its intentions for any future sale, saying the bank has been reducing its non-performing loans “in an organic fashion very significantly” and would continue to do so. “There is no change in policy with respect to management of NPLs,” Mr Verbraeken said.

Non-performing loans following the Irish loans sale will on a group-wide basis across Europe fall well below the 5% ratio often cited as a normal level for European lenders.

Mr Verbraeken also cited the comments of Central Bank deputy governor Ed Sibley who earlier this year said the sale of non-performing loans could be one way for lenders to reduce NPLs on their books.

Other banks, Permanent TSB in particular, have been under scrutiny by politicians for sales of non-performing loans, while Bank of Ireland, more recently, has said it too may, after all, consider the sale of non-performing loans.

KBC Ireland said it was “comfortable” with its 11% share of the mortgage market but the amount of new home lending, which may top €8bn this year, will depend on the level of new home building. Its net profit of almost €116m compared with €173.1m a year earlier but comes after a net release of provisions of €80m, down from €135m a year earlier.