Bank of Ireland sells €590m PF portfolio at discount

Japanese bank SMBC was the buyer, picking up the project finance loans for around 85% of their value. The Irish bank expects to net €470m from the sale. In total, the bank has sold some €1.55bn of project finance loans at 90% of their value.

Bank of Ireland (BoI), 36 percent-owned by the Irish state, is continuing to divest its project finance portfolio as the bank seeks to deleverage. Its latest sale has seen it offload €590 million worth of project finance loans to Japanese bank Sumitomo Mitsui Banking Corporation (SMBC), the bank announced on Monday.

The loans have been sold “for a price of circa 85 percent of these commitments” – or a 15 percent discount to par – and should generate about €470 million in proceeds for the bank. BoI pointed out that about €560 million of loans have been drawn as at September 30. The portfolio is underpinning infrastructure and energy assets across North America and Europe.

The bank seems to have taken a bigger hit with this sale compared to previous project finance loan divestments. In a statement, BoI said that it had managed to sell €670 million of loans in October “for a price of circa 92 percent of commitments”. In all, the bank has divested €1.55 billion of project finance loans – including €1.32 billion of drawings – this year at about 90 percent of their face value.

Ireland’s central bank told BoI earlier this year 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.

Around this time last year, 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 earlier this year to offload some €2.6 billion of international project finance debt.

BoI’s global project finance team, headed by Adrian Olson, 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.

To find out more about the deal, go to Infrastructure Investor Assets.