KBC Bank Ireland has agreed a deal to sell a non-performing mortgage loan portfolio worth about €1.1 billion to private equity fund CarVal Investors.

The bank said that Pepper Finance Corporation (Ireland) will manage the loans after the deal is completed.

The portfolio is made of up about 5,000 home and buy to let mortgages as well as a small number of non-mortgage non-performing loans.

It represents "substantially all" of KBC Bank Ireland's remaining non-performing mortgage loan portfolio, the bank said.

Today's deal follows the bank's announcement in April that it was exploring options to divest its remaining non-performing mortgage loan portfolio and had entered talks with Bank of Ireland about the sale of the majority of its Irish business.

Pepper, which is regulated by the Central Bank here, said that after the transfer of the loans from KBC Bank Ireland, it will hold legal title to the 5,000 mortgages.

Customers will continue to have the same legal and regulatory protections and the Code of Conduct on Mortgage Arrear after the sale, KBC Bank Ireland said.

KBC Bank Ireland said there is no immediate change for customers and they do not need to take any action as a result of today's announcement.

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The bank said that before the closing of the transaction, KBC Bank Ireland will contact the customers whose loan is included in the sale, to inform them that their loan is being transferred.

"I'm confident that the agreement we have signed for the sale of substantially all of the remaining non-performing mortgage loan portfolio, and with Pepper managing the loans post completion, offers a good and sustainable solution for our non-performing mortgage loan customers," KBC Bank Ireland CEO Ales Blazek said.

"We can assure that any customers whose loans are included in the transaction will continue to be afforded the same legal and regulatory protections. Pepper is a well established player in the Irish market," he said.

"Affected customers will be contacted shortly regarding concrete steps related to them," the bank CEO added.

Cormac Ryan, CEO of Pepper in Ireland, said the company was very pleased to be entrusted with KBC Bank Ireland's borrower relationships.

"Our team is committed to working closely with customers requiring support to provide them with long-term solutions, tailored to their individual situations," Mr Ryan said.

"This new mandate is a great reflection on the reputation our team has earned in recent years for its expertise, capability, professionalism and the quality of the service we provide to residential mortgage customers," he added.

Pepper said that the KBC Bank Ireland deal brings the total value of residential loans managed by it, on behalf of investors and financial institutions, to over €12 billion.

85% of these loans are categorised as performing loans with over €19 billion of loans under management in total.

The loan-servicing firm currently employs about 475 staff at its offices in Shannon and Dublin.