Bank of Ireland to sell €3bn of international PF loans

The bank is keeping its Irish loans but is exiting the international project finance arena with the sale of a €3bn loan book, starting in mid-April. Deutsche Bank has been hired to advise on the sale.

Bank of Ireland (BoI) is joining Portugal’s Banco Espirito Santo (BES) and Royal Bank of Scotland (RBS) in selling a substantial part of its project finance book as it seeks to deleverage.

The Irish bank is divesting a €3 billion portfolio of international project finance loans, although it will be holding on to its Irish project finance loans, a spokeswoman for the bank said. The majority of the loans up for sale are in relation to UK infrastructure deals – including €113 million of debt for the Greater Manchester waste project and a €60 million facility for Birmingham Highways Maintenance PFI – but the portfolio also spans continental Europe, North America, Australia and the Middle East.

Deutsche Bank has been hired to advise on the sale, which is due to launch officially in mid-April, the spokeswoman added. BoI’s decision to sell its international project finance book comes after Ireland’s central bank ordered it on March 31 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. This has led the bank to start selling a number of “niche international businesses,” the spokeswoman said.

BoI, 36 percent-owned by the Irish state, has become the third European bank to put its project finance assets on the market to help reduce the size of its balance sheet. Britain’s RBS sold €4.5 billion of project finance loans to Japan’s Bank of Tokyo-Mitsubishi in November 2010, although it is unclear if it was able to sell the portfolio at par. And Portugal’s BES is currently selling €2.6 billion of international project finance debt, including loans to the UK’s M6 toll road, London City Airport and Peel Ports. Like BoI, BES is also keeping its domestic project finance portfolio.

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, the bank writes on its website.  The team’s three main areas of activity are infrastructure, oil and gas and energy.