Bank of Ireland sells another PF portfolio at discount

Aviva Special PFI LP, a fund managed by Aviva Investors, picked up a €200m portfolio of UK project finance loans from the Irish lender for 81% of its value.

Bank of Ireland (BoI), 36 percent-owned by the Irish state, has sold another portfolio of project finance loans, this time at a steeper discount than previous portfolio divestments.

Aviva Special PFI LP, a fund managed by Aviva Investors, bought the portfolio – comprising €200 million of drawn and undrawn UK infrastructure project finance loans – for 81 percent of its value. As with previous sales, BoI will use the proceeds to “further reduce the bank’s funding requirements, in line with the bank’s deleveraging plans”.

BoI has, however, been taking a bigger hit with each project finance portfolio it has divested. Last October, the bank managed to sell €670 million of loans for a price of circa 92 percent of commitments. In December, it then offloaded €590 million worth of project finance loans to Japanese bank Sumitomo Mitsui Banking Corporation (SMBC) for 85 percent of their value.

In total, BoI has divested close to €2 billion of project finance loans.

Ireland’s central bank told BoI in 2011 to raise €5.2 billion in new capital and sell €30 billion of non-core assets following stress tests applied to the country’s banks. But the bank has not been alone in disposing of its project finance loans to help strengthen its balance sheet.

In late 2010, the UK’s Royal Bank of Scotland sold €4.5 billion of project finance loans to Bank of Tokyo-Mitsubishi. And Portugal’s Banco Espirito Santo was also on the market in 2011 to offload some €2.6 billion of international project finance debt.

BoI’s global project finance team was set up in 1996 and employs over 40 professionals across the bank’s offices in Dublin, London, Sydney and Stamford, Connecticut, according to the bank’s website. The team’s three main areas of activity are infrastructure, oil and gas and energy.