Cerberus rubberstamps Danske loan deal

Danske Bank has confirmed for the first time a €250m deal finalised earlier this month to offload hundreds of residential mortgages and other personal loans to an American private equity firm.

The Sunday Times reported in August that agreement had been reached with Cerberus Capital Management to dispose of hundreds of owner-occupier mortgages, buy-to-let loans and unsecured personal borrowings.

Since then, customers have been receiving letters from Danske Bank confirming that their loans have been sold. The disposal marks the final stage in its withdrawal from retail banking in Ireland, after the closure of all branches and customer accounts in 2014.

In results for the first nine months of 2016 issued on Friday, the Danish lender revealed that it had “entered into a binding agreement on the sale of a loan portfolio with a nominal value of DKK 1.9bn (€255m)”, believed to comprise mortgages and other personal loans in the Republic.

The bank declined to comment.

The Danske deal comes at the same time that Cerberus has agreed to buy a €2.5bn portfolio of impaired loans from Ulster Bank.

Results issued on Friday by RBS, Ulster Bank’s UK parent, reveal that the transaction yielded a book profit of £17m (€18.8m).

The profit was calculated, however, after the significant write down in the carrying value of the loans to reflect the fact that 88% of the mortgages involved had arrears of greater than three years.

The bank was seeking repossession for all of the 900 mortgages involved.

Ulster Bank reported operating profits of £190m for the first nine months of 2016.

This was less than the £255m reported for the same period of 2015, mainly because of the release of bad debt provisions in the previous year.

Announcing the results, group chief executive Ross McEwan said RBS would consider acquisitions to raise Ulster Bank’s presence in Ireland.

His comments rekindled speculation of a possible link-up with Permanent TSB, which is 75% owned by the Irish state, or Belgian-owned KBC Bank, which has yet to decide its future in Ireland.