AIB Group PLC AIB - sale of non-performing loan portfolio (1526P)
October 14 2021 - 12:11PM
UK Regulatory
TIDMAIBG
RNS Number : 1526P
AIB Group PLC
14 October 2021
14 October 2021
AIB Group plc - SALE oF NON-PERFORMING LOAN PORTFOLIO
AIB Group plc ("AIB") has agreed to sell a non-performing loan
portfolio in long-term default to Mars Capital Finance Ireland DAC
("Mars"), as part of a consortium that includes Ellington
Management Group. This is another important step in reducing our
Non-Performing Exposures (NPE).
At completion, AIB will receive cash consideration of
approximately EUR0.4 billion. The proceeds will be used for general
corporate purposes, including the continuation of support for
customer restructuring.
The sale is expected to be capital accretive and alleviates the
negative impact of calendar provisioning associated with this
long-term NPE portfolio.
As at June 2021, the loan portfolio had a gross NPE value of
c.EUR0.4 billion and a fully loaded risk-weighted assets (RWA)
position of c.EUR0.3 billion. In the year ended 31 December 2020,
the loan portfolio incurred a loss before tax and post-provisions
of c.EUR56 million.
The portfolio consists of c.2,150 non-performing customer
connections, with an average time in default of c.9 years. All
customers were in default prior to the onset of the COVID-19
pandemic.
All customers in the loan portfolio sale will continue to have
the same regulatory protections under the Consumer Protection Code
(CPC) and the Code of Conduct on Mortgage Arrears (CCMA) after the
sale. The loans will be sold with the benefit of existing legal
protections under the customers' loan contracts.
The reduction of long-term NPEs remains a priority for AIB,
given their significant and unsustainable capital costs. The
completion of this transaction brings the June 2021 pro-forma NPE
ratio to under 6% from 6.5%. We continue to make progress towards
our medium-term NPE target of c.3%.
Further information:
-- AIB's preference is to work with customers to implement
sustainable solutions. We have provided over 115,000 solutions to
customers, including over 48,000 private dwelling homes (PDH)
customers. This has been achieved by offering customers a
comprehensive range of solutions over an extended number of years,
partnering with the enhanced Mortgage-to-Rent scheme with
significant success, and the completion of a series of proactive
customer contact and engagement programmes.
-- AIB continues to dedicate a considerable number of staff
across the country to support customers who are in financial
difficulty.
-- The buyer, Mars, is a regulated entity and will be
responsible for all regulated activities in relation to the
portfolio and will also service the portfolio.
-- The portfolio comprises residential assets, including c.88%
PDH. The portfolio extends across c.2,300 properties.
-- AIB will now contact impacted customers to inform them that
their loans are being transferred.
-ENDS-
Contact details:
Niamh Hore / Siobhain Walsh Paddy McDonnell / Graham Union
Investor Relations Media Relations
AIB Group AIB Group
Dublin Dublin
Tel: +353-86-3135647 / +353-87-3956864 Tel: +353-87-7390743 / +353-85-2088343
email: niamh.a.hore@aib.ie email: paddy.x.mcdonnell@aib.ie
siobhain.m.walsh@aib.ie graham.x.union@aib.ie
Forward Looking Statements
This document contains certain forward looking statements with
respect to the financial condition, results of operations and
business of AIB Group and certain of the plans and objectives of
the Group. These forward looking statements can be identified by
the fact that they do not relate only to historical or current
facts. Forward looking statements sometimes use words such as
'aim', 'anticipate', 'target', 'expect', 'estimate', 'intend',
'plan', 'goal', 'believe', 'may', 'could', 'will', 'seek',
'continue', 'should', 'assume', or other words of similar meaning.
Examples of forward looking statements include, among others,
statements regarding the Group's future financial position, capital
structure, Government shareholding in the Group, income growth,
loan losses, business strategy, projected costs, capital ratios,
estimates of capital expenditures, and plans and objectives for
future operations. Because such statements are inherently subject
to risks and uncertainties, actual results may differ materially
from those expressed or implied by such forward looking
information. By their nature, forward looking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by these forward looking
statements. These are set out in the Principal risks on pages 50 to
53 in the Annual Financial Report 2020 and updated on page 36 of
the Half-Yearly Financial Report 2021. In addition to matters
relating to the Group's business, future performance will be
impacted by direct and indirect impacts of the COVID-19 pandemic
and by Irish, UK and wider European and global economic and
financial market considerations. Any forward looking statements
made by or on behalf of the Group speak only as of the date they
are made. The Group cautions that the list of important factors on
pages 50 to 53 of the Annual Financial Report 2020 is not
exhaustive. Investors and others should carefully consider the
foregoing factors and other uncertainties and events when making an
investment decision based on any forward looking statement.
Figures presented may be subject to rounding.
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END
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