Lloyds Banking Group Plc (LLOY) plans to sell about 2 billion euros ($2.5 billion) of mainly Irish real- estate loans, the latest phase in extricating itself from Western Europe’s biggest property crash, according to a person with knowledge of the transaction.
The U.K.’s second-biggest government-aided bank will probably have to take discounts on the sale, said the person, who declined to be identified because details of the sale are private. Ian Kitts, a Lloyds spokesman, declined to comment.
Lloyds, based in London, moved in 2010 to close and run down the Irish unit it acquired two years earlier as part of its takeover of HBOS Plc. The bank has taken 11.8 billion pounds of impairment charges on Irish loans since the nation’s real-estate market collapsed four years ago, according to data compiled by Bloomberg News. That equates to 40 percent of its end-2008 Irish loan book.
Two years ago, the bank largely handed management of its Irish portfolio to Certus, a company set up by members of its former Irish management team. Lloyds said in July its exposure to Ireland is “being closely managed, with a dedicated U.K.- based business support team in place to manage the winding down of the book.”
Some 86 percent of Lloyds’ 16.1 billion-pound Irish wholesale portfolio, mainly commercial real-estate loans, was impaired, or unlikely to be repaid in full, at the end of June, the group said on July 26.
Kennedy-Wilson Holdings Inc. (KW) and Deutsche Bank AG agreed to acquire 360 million euros of non-performing commercial property loans from Lloyds at an average 83 percent discount to par value, CoStar Group Inc., the commercial real-estate information company, reported in June. Lloyds said in July it sold 300 million pounds of gross Irish wholesale assets during the first six months without giving further details.
Irish commercial real-estate prices have plunged by two- thirds from its 2007 peak, according to Investment Property Databank Ltd., while residential property has halved in value, the Central Statistics Office said Aug. 30.