The above title is deliberately false and misleading – the Minister for Finance Michael Noonan was this week asked in the national parliament of the State to provide details of the sale of €675m of assets by AIB, a bank that we now own 99.8% – and the answer to a series of questions was “that would be an operational matter” and with the exception of one interesting snippet – the buyer of the assets is not regulated – the Minister is not telling us anything about the sale of assets with a nominal value of four times the State’s stake in Aer Lingus.
Minister Noonan was being quizzed by the Sinn Fein finance spokesperson Pearse Doherty who asked the Minister to confirm the sale price achieved for the €675m of loans that comprised the so-called Project Kildare portfolio. You and I own 99.8% of these loans so you might have thought it was our right to know how much they fetched. Not according to Minister Noonan.
Deputy Doherty asked if AIB made a loss on the sale. Again, you might have thought we had a right to know if a bank which we practically own has made a loss on what appears to be a huge transaction. Not according to Minister Noonan. By the way, industry insiders suggest an additional loss was booked on the transaction. The loans had a nominal value of €675m – actually €660m according to the Minister – and also had provisions booked by AIB against them, but it is believed AIB had to book an additional loss, over and above the provisions.
Deputy Doherty asked about the fate of the borrowers for these loans, believed to be mostly Irish companies and individuals. Whilst the contract affecting the loans won’t change, these borrowers are waving goodbye to tried and tested relationship with AIB and the buyer of the loans, US outfit Lone Star is not even regulated in Ireland. According to Minister Noonan “The Purchaser is not a regulated entity. It should be noted that this portfolio principally comprises commercial real estate loans which are not subject to the same level of regulation that applies to home loans. “
Deputy Doherty asked “the quantum of fees and commissions that AIB is paying to organisations which were engaged to assist with the sale, including fees paid to Morgan Stanley and legal fees” to which the response was “AIB has further informed me that it typically engages external parties to advise it on sale processes in order to avail of relevant and necessary experience and expertise. AIB does not disclose the amounts paid to these advisors for commercial reasons.”
So there you have it. You live in a State which can sell assets with a nominal value of €675m to an unregulated US outfit largely unknown in this country. And you can’t be told how much the assets fetched, if we made a loss on the deal and how much we paid to professionals handling the sale. Maybe we should put “Democratic” in front of “Republic of Ireland” as a nod to North Korea.
The full parliamentary questions and responses are here:
Deputy Pearse Doherty: To ask the Minister for Finance further to reports that Allied Irish Banks, in which he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, if he will confirm the sale price of portfolio; if AIB will book an additional loss on the sale compared with the existing book value of the loans net of provisions, and if so, the quantum of the additional loss..
Minister for Finance, Michael Noonan: The sale of loan portfolios is a commercial matter for the management and the Board of the Bank. I do not have a role in this function.
AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately €660m nominal of loan assets as part of its continuing strategy to meet its non-core deleveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
The sale price is a matter of confidentiality between the parties. It is normal course of practice that sales processes are conducted under appropriate confidentiality constraints in order to protect the interests of all parties.
AIB is satisfied that it has maximised value for the Bank and its stakeholders as the portfolio was sold following the completion of a comprehensive two stage competitive auction sales process involving a number of credible international investors.
This transaction facilitated the deleveraging of a substantial non-core portfolio and subject to completion of closing conditions is expected to close prior to year end.
This sale brings AIB’s total net non-core deleveraging to date to 80% of AIB’s 3 year PLAR deleveraging target of €20.5bn. AIB remains on course to complete the majority of its total 2013 deleveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
Deputy Pearse Doherty: To ask the Minister for Finance further to reports that Allied Irish Banks, in which he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, if he will confirm that arrangements will be made to ensure borrowers whose loans have been acquired by Lone Star, do not suffer inconvenience or loss..
Minister for Finance, Michael Noonan: The sale of loan portfolios is a commercial matter for the management and the Board of the Bank. I do not have a role in this function.
AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately
€660m nominal of loan assets as part of its continuing strategy to meet its non-core deleveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
Communication with affected borrowers has been a priority for the Bank and each Borrower will receive, in addition to verbal notification, a written communication from EBS notifying them of the sale. Subsequent to completion they will also receive further written communication from EBS and separately from Vesta Mortgage Investment setting out the arrangements for the management of their loans going forward. Affected Borrowers will continue to remain liable for the full amount of their debt. Their loan terms and conditions remain unchanged and are not impacted by the sale of their loans.
This sale brings AIB’s total net non-core deleveraging to date to 80% of AIB’s 3 year PLAR deleveraging target of €20.5bn. AIB remains on course to complete the majority of its total 2013 deleveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
Deputy Pearse Doherty: To ask the Minister for Finance further to reports that Allied Irish Banks, in which the he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, can he confirm the regulations that govern the relationship between Lone Star and the borrowers whose loans have been acquired..
Minister for Finance, Michael Noonan: The sale of loan portfolios is a commercial matter for the management and the Board of the Bank. I do not have a role in this function.
AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately
€660m nominal of loan assets as part of its continuing strategy to meet its non-core deleveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
The purchaser was selected following the completion of a comprehensive two stage competitive auction sales process involving a number of credible international investors. AIB has informed me that it is satisfied that by selecting the Purchaser following this sale process, it has maximised value for the bank and its stakeholders. This transaction was approved by the Boards of both EBS and AIB and AIB’s Deleveraging Committee which includes non-voting observers from my Department and the Central Bank.
The loan terms and conditions of Borrowers whose loans form part of the sale remain unchanged and are not impacted by the sale of their loans. The Purchaser is not a regulated entity. It should be noted that this portfolio principally comprises commercial real estate loans which are not subject to the same level of regulation that applies to home loans.
Communication with affected borrowers has been a priority for the Bank and each Borrower will receive, in addition to verbal notification, a written communication from EBS notifying them of the sale. Subsequent to completion they will also receive further written communication from EBS and separately from Vesta Mortgage Investment setting out the arrangements for the management of their loans going forward. Affected Borrowers will continue to remain liable for the full amount of their debt. Their loan terms and conditions remain unchanged and are not impacted by the sale of their loans.
This sale brings AIB’s total net non-core deleveraging to date to 80% of AIB’s 3 year PLAR deleveraging target of €20.5bn. AIB remains on course to complete the majority of its total 2013 deleveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
Deputy Pearse Doherty: To ask the Minister for Finance further to reports that Allied Irish Banks, in which he is the shareholder of 99.8% of the shares, has sold a portfolio of loans with a nominal value of €675m to Lone Star, if he will confirm the quantum of fees and commissions that AIB is paying to organisations which were engaged to assist with the sale, including fees paid to Morgan Stanley and legal fees..
Minister for Finance, Michael Noonan: The sale of loan portfolios and the appointment of advisors is a commercial matter for the management and the Board of the Bank. I do not have a role in this function.
However, AIB has informed me that EBS Limited has contracted to sell to Vesta Mortgage Investment Limited, (an affiliate of Lone Star), approximately €660m nominal of loan assets as part of its continuing strategy to meet its non-core deleveraging targets. The portfolio is primarily comprised of non-core Irish commercial real estate loans originated by EBS Limited.
The purchaser was selected following the completion of a comprehensive two stage competitive auction sales process involving a number of credible international investors. This transaction was approved by the Boards of both EBS and AIB and AIB’s Deleveraging Committee which includes non-voting observers from my Department and the Central Bank.
AIB has further informed me that it typically engages external parties to advise it on sale processes in order to avail of relevant and necessary experience and expertise. AIB does not disclose the amounts paid to these advisors for commercial reasons. As AIB has a strong focus on minimising the costs to the bank of these expert advisors, in each case, the bank undertook a competitive tendering process to select the advisors to assist in this sale process. These processes focused on relevant experience, product knowledge, quality of advisory team and fee structure. Furthermore, in the case of the sales advisor, fees were structured to incentivise the advisor to assist in maximising value for the bank and its stakeholders.
This sale brings AIB’s total net non-core deleveraging to date to 80% of AIB’s 3 year PLAR deleveraging target of €20.5bn. AIB remains on course to complete the majority of its total 2013 deleveraging targets by year end 2012 and to achieve this target in line with PCAR capital requirements assumed under the March 2011 exercise.
NAMA Wine Lake 