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Halifax Bank of Scotland
Apollo Global Management
Irish Mortgage Sell Off
Government owned Lloyds TSB is back on the sale trail flogging off more of its distressed properties and property loans to hungry investment funds and other buyers, what it calls a "strategy of shrinking its balance sheet by shedding non-core assets".
The latest sale is a £1.46 billion portfolio of loans attached to distressed properties in Ireland to Risali Limited a private equity group linked to Apollo Global Management for a tenth of their face value – just the latest step in the company's planned withdrawal from the Irish market, ironically just at a time when the market is almost certainly turning a corner. Risali is reported to have paid £149 million for the portfolio.
"The transaction is not expected to have a material impact on the group due to the significant impairment provisions held against the portfolio," Lloyds said Monday.
Lloyds certainly has plenty to sell, after it purchased Halifax Bank of Scotland (HBOS) and its billions of Euros worth of Irish loans just before the Irish property bubble burst. Of £16.1 billion worth of Irish property loans, 85.5% is impaired or unlikely to be repaid in full. In the first nine months of 2012 Lloyds reduced the amount of non-core assets it holds by £31bn. It expects to reduce non-core assets by a further £7bn by year end.
According to Lloyds the portfolio, which is linked to loans secured on property and hotels, mainly in Ireland, generated losses of £202m last year. This, it said is higher than the average across the Irish wholesale book because of the particularly distressed nature of the assets.
Commercial property prices in Ireland have fallen by at least 60 per cent since the Celtic Tiger economy peaked in 2007.
Lloyds should find it less and less difficult to find buyers as signs increase that the economy and property markets are stabilising. Indeed several private equity groups have bought assets in Ireland over recent months, including the purchase of a flagship office block in Dublin city centre for just over €100m by Kennedy Wilson, who also bid on the Lloyds portfolio purchased by Risali according to sources in the media.
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