Lloyds Banking Group has agreed the sale of a portfolio of Irish commercial loans to a consortium for a cash consideration of approximately £827m at current exchange rates.
The group comprises Ennis Property Finance - an entity affiliated to Goldman Sachs - Feniton Property Finance - an entity affiliated to CarVal - and Bank of Ireland.
The gross assets subject to the transaction are circa £2.6bn, of which £2.3bn were impaired and in the year to 31 December 2014 generated pre tax losses of circa £130m, according to a statement from the banking group.
The sale proceeds will be used for general corporate purposes and the transaction is not expected to have a material impact on the group, but will be capital accretive in the region of 7 basis points.
The sale is in line with the group’s strategy of deleveraging its balance sheet by reducing run off assets and creating a low risk, UK focused bank.
As at the end of June, impaired loans represented 2.7 per cent of closing advances and provisions as a percentage of impaired loans were 55.1 per cent. On a pro-forma basis, the impact of this sale would be to reduce the impaired loans as a percentage of closing advances to 2.2 per cent and provisions as a percentage of impaired loans to 48.3 per cent.
Following this transaction, which is expected to complete in the fourth quarter, the group will also have minimal (less than £30m) remaining exposure to commercial assets in Ireland.
peter.walker@ft.com
