AIB ‘can’t rule out’ farm loan sales to vulture fund

Allied Irish Bank (AIB) has confirmed that it is considering selling a number of farm loans, which are part of a €6.3bn portfolio of impaired loans, to a so-called vulture fund.

Last week, the head of AIB’s financial solution group, Jim O’Keeffe, told the Oireachtas Committee on Finance that loans using farms as collateral were at particular risk.

“We do have some farming loans or some farming connections which have a much bigger overhang of investment debt than actually the farming connection itself and they are cross-secured against the farm and vice versa in relation to it,” O’Keeffe said.

Both Permanent TSB and AIB attended the Oireachtas Committee, however the frustration of a number of deputies at the hearing was palpable.

Fianna Fáil deputy Michael McGrath said: “The bank comes before the Oireachtas Committee as a State-owned bank – 71% owned by taxpayers – and it gives zero information. I do not think that is good enough.”

An AIB spokesperson told the Irish Farmers Journal that: “AIB has reduced its impaired loans to circa €6.3bn from a peak of circa €29bn over the past four years.

“During this period some impaired portfolios were sold and case-by-case restructuring continued.”

However, the threat of a potential vulture fund sale remains for farmers unable to meet bank requirements for loan restructuring.

The head of AIB’s financial solution group added at the Oireachtas Committee : “At the same time that we are focused on potential loan sales, we are focused on those investment classes and that overhang of investment on those businesses.

“I can’t rule out as we go through that process that we wouldn’t have to look at SME or farming.”

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