Irish lender Permanent TSB Group Holdings Plc has hired Morgan Stanley to sell its commercial real estate and subprime residential mortgage loan books, which have a combined face value of approximately €2.6bn. Most of the loans are non-performing and are valued at a discount on TSB’s balance sheet after bad-debt provisions.
The lender’s chief executive, Jeremy Masding, is taking steps to trim down what was once the largest lender in the country to demonstrate to European antitrust authorities that it is viable after a €4bn state bailout. The influx of overseas buyers interested in the loans includes Blackstone Group LP and Kennedy Wilson Holdings Inc.
Masding stated in March that the bank planned to sell off its Irish commercial real estate and subprime home loans business in 2014, before it started marketing its UK residential mortgage unit. Previously, it had planned to sell its UK operation, Capital Home Loans, which has €6.7bn of loans.
According to its annual report, Permanent TSB had set aside €911m of provisions for bad debts in its commercial loan book on December 31.
The bank’s net loss shrank to €261m from €996m on a one-time basis from winding up a defined benefit pension plan to offset an increase in bad loan impairment charges. The group does not expect to be profitable until 2017.
Ireland’s two largest lenders, Bank of Ireland Plc and Allied Irish Banks Plc, were each profitable in Q1 of 2014 for the first time since the 2008 financial crisis due to fewer loan losses.
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