AIB is preparing to launch the largest non-performing loan sale in its history next month as it embarks on the final phase of its post-crisis balance sheet purge amid a fresh crackdown on the sector from the European Central Bank.
It is understood soured loans with a face value of close to €2bn will be marketed for sale at the end of November, in a process dubbed Project Redwood. Irish lenders remain under pressure to swiftly resolve legacy-era debts as the ECB threatens more punitive measures on those banks still saddled with non-performing exposures (NPEs) that exceed the region’s average of close to 5pc of the total loan book.
Hundreds of staff within AIBS’s loan work-out unit – the Financial Solutions Group (FSG), which manages distressed loans across the group – are understood to be working on Project Redwood, as it races to conclude a deal ahead of annual results in March.
Sources said a smaller portfolio of non-performing loans at the bank – initially earmarked for a separate sale – has now been folded into Project Redwood. The bank remains on course to offload a further €300m worth of impaired loans by December, underscoring its determination to radically reduce its legacy book – a move that in turn frees up capital and increases the prospect of a special dividend. The smaller Project Pine book contains soured loans linked to assets in the UK, with over half the debts tied to assets in the North.
AIB declined to comment on the sales. But a bank spokesperson said in the first half the lender has cut its impaired loans – the most troubled portion of its NPE book – from roughly €9.1bn to €7.8bn. He said AIB “works through loans on a case-by-case basis” and added “we remain focuse