Non Performing Loan Sales trend to continue in 2019

Bank of Ireland, AIB and Ulster Bank, three of Ireland’s largest banks have all went on record to state they expect to sell billions of euros of non performing loans in 2019. These loans will be a mixture of commercial and residential home loans. This is nothing new of course as in the last five years there have now been well over €100BN of loan sales of non performing loans by Irish banks and a lot more right across the UK and Europe as the banks continue in an attempt to clean up their broken balance sheets and repair their businesses.

In the last few weeks both AIB and Ulster Bank have confirmed they are close to triggering the auction for their latest NPL books and at the point of writing we are all waiting to hear when bank of Ireland are going to join the party,

Off course it’s no party off course if you happen to be caught up in this process, as it typically means your loan will have a new owner who most definitely won’t be a bank and will be looking for some kind of return on their investment within a relatively short period of time. 

As someone who has worked in this space for over eight years now, there are arguments for and against banks selling NPL’s, but the reality remains, the discussion is of no benefit to the borrower, as they now need to get their act together and put in place a plan which will hopefully lead to them retaining ownership of their homes and businesses.

In 2011, we set up GDP Equity Experts with one aim which was to help people who found themselves in financial distress due to loan positions that became unsustainable. In the last eight years, we have been able to impact hundreds of businesses and family’s in a very positive way, which is very rewarding. If I am being honest, I never thought at that time we would still be dealing with people in 2019 who were going through the same challenges we were seeing in the early stages of our business. 

In 2016, due to the liquidity problem in Ireland and the lack of availability of finance to the business community in particular, we felt there was something else we could do which would also help people who found themselves in a position where their loan was sold. 

Clear path, an alternative lending business, is now well established across the island of Ireland with offices in Belfast, Dublin and Manchester and in the last two years we have originated well over £30M of new facilities, where a huge chunk of this money was for people who found themselves in a position where their loans were sold and they needed new funding to retain control of their assets and businesses. 

What we know is AIB plan to sell over €1.5BN of NPL loans in the next few months, Ulster are getting their ducks in a row also and I expect Bank Of Ireland to announce plans in the not too distant future. If you or your client finds themselves in this position it is incumbent you have a plan in place which primarily will involve having new finance in place to retain ownership of your assets or business. It is important to be aware that there are often a blend of funding solutions for people in this position including alternative finance arrangements for shorter periods of time, mezzanine and bridging finance and also opportunities where equity players may get involved if it works for all parties.

From our own business perspective, we are set up to help you regardless of where you find yourself, be it from a debt advisory perspective or a new funding line. The trick in all of this is to get a plan in place as soon as possible increasing the odds of a successful outcome.

If you need any advice in relation to any of this, feel free to reach out to me on LINKEDIN or drop me an email. 

You can also have a look at our website which we have dedicated to this complex topic

Conor Devine MRICS