Bank of Ireland has agreed to sell portfolios of non-performing Irish and UK loans in two separate transactions.
The bundle of Irish loans is made up mostly of private residential and buy to let mortgages as well as a small portfolio of other non-mortgage bad loans.
The loans, which are worth €800m, are being bought by funds managed by investment management firm, CarVal Investors.
After an interim period during which the legal title is transferred, the loans will be managed by Mars Capital.
It is expected that the deal will complete in later this year.
Under Central Bank rules, the borrowers will continue to have the same legal and regulatory protections after the sale is complete, Bank of Ireland stated.
The bank said it will contact customers whose loans are included in the sale prior to the transfer to inform them.
Separately, Bank of Ireland has also agreed a deal to see a tranche of non-performing mortgages in the UK.
Worth a total of €600m, they are mostly loans on owner occupied and buy to let investment properties.
The sale will take place through a securitisation and after the transaction is complete on this day next week, the mortgages will continue to be serviced by the bank, although they will not be present on its balance sheet.
The two sales will lead to Bank of Ireland's non-performing exposures being cut from 5.4% to around 3.7%, well below the threshold of 5% sought by regulators.
In total the portfolios had been yielding an annual gross interest income of around €30 million.
The move is likely to be seen by analysts as another important step by Bank of Ireland in cleaning up its balance sheet after the final crisis over a decade ago.
