THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND (THE "BANK")
Sale of Burdale and Deleveraging Update
19 DECEMBER 2011
Burdale
Today, the Bank announces that it has agreed to sell Burdale
to Wells Fargo Bank NA. Headquartered in London, Burdale is a
leading provider of comprehensive asset based lending to the
UK market. In recent years, it has also established a
presence in the North American comprehensive asset based
lending market from its base in Stamford, Connecticut.
The transaction will be effected by way of a sale of the
entire issued share capital of Burdale Financial Holdings
Limited ("BFHL"), the UK entity, to Wells Fargo International
Banking Corporation ("WFIBC") and a sale by Burdale Capital
Finance Inc. ("BCF"), the US entity, of its loan book to
Wells Fargo Bank NA. In the year ended
31 December 2010, BFHL generated profit before tax of £20.7
million. As at 31
December 2010, BFHL's gross assets amounted to £352 million
and BCF's gross assets amounted to £242 million.
Under the terms of the transaction, the Bank will incur an
aggregate discount of circa
£4.7 million on the combined net asset value of BFHL and the
net asset value of the BCF loan book at completion. This
discount equates to circa 0.4% of Burdale's total loan
commitments of circa £1,318 million as at 30 November 2011
and to circa 0.8% of Burdale's total drawn balances of circa
£575 million at the same date.
Upon completion, WFIBC will satisfy any indebtedness owed by
BFHL to the Bank. The total cash proceeds, including the
repayment of inter-company indebtedness, of circa €690
million (before taking account of transaction and related
costs) will
further reduce the Bank's wholesale borrowings including
those from Monetary Authorities in line with the Bank's
deleveraging plan. In addition, from a capital ratio
perspective, this sale will not adversely impact the Group's
Core Tier 1 ratio.
Deleveraging Update
As announced as part of the 2011 Prudential Capital Adequacy
Review ("PCAR") on
31 March 2011, the Group envisages reducing the size of its
loan book from €114 billion at 31 December 2010 to circa €90
billion at 31 December 2013. As part of this deleveraging,
the Group plans to divest €10 billion of certain loan
portfolios /lending businesses.
In addition to the announcement on Burdale set out above, the
Group announced a number of other divestment transactions on
14 October 2011 and 28 November
2011.
Separately, the Group has, during the course of 2011,
undertaken a range of other divestment initiatives on
individual loans and smaller loan portfolios that were not
individually of a sufficient size to merit separate
disclosure.
The table below sets out a summary of the total of €8.6
billion of divestments achieved during 2011:
Divestments Announced YTD 2011 (€ equivalents) | 14 October 2011 €bn | 28 November 2011 €bn | 19 December 2011 €bn | Total 2011 €bn |
US Commercial Real Estate Portfolio | 0.8 | 0.8 | ||
UK Commercial Real Estate Portfolio | 1.5 | 1.5 | ||
UK Mortgage Loan Portfolio | 1.4 | 1.4 | ||
Project Finance Loan Portfolios (note 1) | 0.6 | 0.7 | 1.3 | |
Burdale (note 1) | 0.7 | 0.7 | ||
Other International loans (during 2011) | 0.7 | 2.2 | 2.9 | |
Total | 5.0 | 0.7 | 2.9 | 8.6 |
Average discount (based on drawn balances) | 7.1% |
The combined capital impacts of the above remain within the
base case discounts assumed as part of the 2011 Prudential
Capital Assessment Review ("PCAR") and Prudential Liquidity
Assessment Review ("PLAR") processes. From a capital ratio
perspective, the loss incurred on the divestment of assets is
offset by a reduction in the associated risk weighted assets.
The divestments set out above are expected to have a marginal
net positive impact on the Group's Core Tier 1 ratio.
The Bank expects that it will be able to complete the
remaining divestments envisaged under the 2011 PCAR/PLAR
within the overall base case discount assumptions used as
part of the 2011 PCAR.
Loan redemptions and repayments remain in line with our
expectations and deposits have increased since 31 October
2011.
Note 1: Completion subject to certain consents and are
expected to close in the near future.
ENDS
For further information please contact:
Bank of Ireland
Andrew Keating Director of Group Finance +353 (0)766 23
5141
Tony Joyce Head of Group Investor Relations +353 (0)766 23
4729
Dan Loughrey Head of Group Communications +353 (0)766 23 4770
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Documents associés | |
Sale of Burdale and Deleveraging Update [pdf] |