Bank of Ireland is selling a tranche of bad loans worth €250 million which are mostly secured on buy-to-let investment properties in this country.

The loans are being bought by Promontoria 2019 – SGA Designated Activity Company, an affiliate of Cerberus Capital Management for €150 million.

95% of the loans are secured on buy-to-let properties, with the other 5% secured on family homes associated with a buy-to-let borrower.

The legal title and servicing of the loans will be transferred to Link ASI Limited, which will become the point of contact for customers holding the loans into the future.

The bank said customers impacted by the change will be written to by it and Link, and in the meantime borrowers do not need to take action.

 "There will be no change to the protections currently afforded to customers under the relevant Central Bank of Ireland statutory codes of conduct, including the Consumer Protection Code," the bank said in a statement.

The move will bring the group's non-performing loan ratio down below the European Central Bank target of 5%, making it the only Irish bank to achieve the target so far.

"Our NPE reduction strategies will continue to be kept under review in response to the associated and evolving regulatory framework," it said.
It will also cause the group’s capital ratio to rise slightly, but at the same time reduce its net interest income by €3 million a year.

Despite the progress in reducing its bad loan exposures, the bank says it is still required to hold much more significant levels of capital against non-performing mortgages than performing ones.

"This is capital that could otherwise be deployed in a range of ways, including lending into the Irish economy," it pointedly said in its statement.

A dedicated customer phone line has been set up for customers with questions on the changes.

The line is open between 9:00am and 5:00pm Monday to Friday and can be reached at 01-6115302. 

Further information is also available on the bank’s website.