Dutch financial group Rabobank is advancing plans to sell off the remaining €3.2 billion loans at its former ACC Bank unit in Ireland at a deep discount, having reclassified the distressed portfolio on its books in recent months.
Sources said the move has paved the way for the loan book to be put on the market in the final quarter of this year, though there is a chance that it could be pushed out to early 2019.
Rabobank signalled in its first-half report, published in recent weeks, that it has moved loans housed in ACC Loan Management in Dublin – the remnant of ACC Bank, which handed back its licence to the Central Bank in 2014 – from its group loan portfolio to its pool of "financial assets". That's because a decision has been taken not to hold the loans until they mature.
A spokesman for ACC Loan Management declined to comment.
The latest set of annual accounts for ACC Loan Management show that the company had taken a €1.88 million bad loans charge against the €3.2 billion portfolio, indicating that it only expected to recover a little over 40 per cent – or €1.32 billion – of its total loans.
Increased focus
Founded in 1927 as a state-owned lender called Agricultural Credit Corporation, the company was acquired by Rabobank, the Netherlands's biggest mortgage lender, in 2002.
ACC Bank was the smallest of Ireland’s biggest 11 retail lenders before the crash, but its increased focus on commercial property lending during the boom would land the lender in trouble along with wider sector in 2008. ACC Loan Management outsourced the day-to-day management of its loans to Capita Asset Services in 2016.
Meanwhile, Rabobank returned its local banking licence to the Central Bank of Ireland in 2016 as part of a global initiative to reduce costs. Its corporate banking business was transferred to the Irish branch of the group, Rabobank Dublin.
In February, the group announced that it was shutting down its Irish online savings operation RaboDirect Ireland, with customers moving a combined €3 billion of deposits and savings by the end of May.
Financial crisis
Rabobank’s plans to sell the remaining ACC loans occur against the backdrop of an acceleration of Irish loan sales this year, as banks that quit lending during the financial crisis wind down their remaining portfolios and surviving banks seek to lower their non-performing loan ratios amid pressure from regulators.
In the past month, Permanent TSB has agreed to sell €2.2 billion of soured mortgages to affiliates of US private equity group Lone Star at a discounted price of €1.3 billion, while Royal Bank of Scotland's Ulster Bank in the Republic struck a deal to dispose of €1.4 billion of distressed home loans to US investment giant Cerberus Capital Management.
Lloyds Banking Group, which inherited the troubled Bank of Scotland (Ireland) portfolio under its 2008 takeover of HBOS, sold its remaining £4 billion (€4.2 billion) Irish mortgages in May to Barclays. Barlcays immediately remarketed the loans, which were mainly made up of performing loans on long term interest-only deals, in a mortgage-securitisation transaction.
