Bank of Ireland moots NPL sale

As much as €2bn of Irish loans could be up for sale.

Bank of Ireland could sell some of its non-performing loans (NPLs) in order to meet regulatory targets.

The bank’s CEO, Francesca McDonagh, refused to rule out a sale of some of its NPL book as it looks at strategies to preserve its capital and boost profitability.

In the bank’s first-half financial statement, McDonagh said: “We expect further reductions in NPEs (non-performing exposures) in the second half of 2018 and beyond. NPE reduction strategies will be kept under review in response to the associated and evolving regulatory capital framework.”

Bank of Ireland has not faced the same extent of bad loans as other Irish lenders such as Allied Irish Bank and Permanent TSB, both of which have sold NPL portfolios in recent years.

However, it is still thought to have NPLs worth approximately 7.5 percent of all loan exposures. The Irish regulator has indicated it wants banks to achieve an NPL target of 5 percent. Bank of Ireland has almost €6 billion of NPLs on its books, meaning it could sell up to €2 billion to achieve the target.

Bank of Ireland said it expects to show further reductions in its NPL portfolio by the end of 2018.

The Irish government has been putting pressure on banks to dispose of NPLs, but opposition politicians have been concerned that loans are being sold to “vulture funds” that will strip assets and threaten homeowners and small businesses in difficulty.

In February, Irish politicians moved to block a sale of €4 billion of NPLs by state-owned Permanent TSB, claiming it was unfair to sell the loans to debt funds at a discount.