Bloomberg News

Bank of Ireland Said to Near Sale of Burdale Unit to Wells Fargo

November 28, 2011

Nov. 25 (Bloomberg) -- Bank of Ireland Plc, the nation’s largest bank by assets, may sell Burdale Finance Ltd., a unit at that extends loans secured against assets, to Wells Fargo & Co., according to two people with knowledge of the matter.

The Dublin-based lender hired Hawkpoint Partners Ltd. in April to advise on the sale of London-based Burdale, which has about 800 million euros ($1.1 billion) of loans in the U.K. and U.S. The bank is in exclusive talks with Wells Fargo, and a deal may be completed by the year-end, said the people, who declined to be identified, because the talks haven’t been completed.

The purchase would be Wells Fargo’s third swoop this year on assets of Irish banks, which are being forced by regulators to shrink their loan books to lower their reliance on central bank funding. The San Francisco-based lender last month bought $1.13 billion euros of U.S. commercial real-estate loans from Bank of Ireland. It agreed earlier this month to buy 3.3 billion euros of U.S. loans from Irish Bank Resolution Corp., the former Anglo Irish Bank Corp.

Bank of Ireland spokeswoman Anne Mathews said the bank is in “exclusive talks with one party” on the sale. She declined to comment further. Richele Messick, a spokeswoman for Wells Fargo, said the bank doesn’t comment on acquisition talks.

Burdale, whose customers include Tate Motors Ltd.’s Jaguar Land Rover, was acquired by Bank of Ireland in 2004 from Wachovia Corp. for 71 million euros. Wells Fargo in turn took over Wachovia in 2008.

Loan Sales

Bank of Ireland, alone among the country’s six largest lenders in avoiding majority state ownership over the past three years, has sold about 5 billion euros of loans this year, at an average discount of 9 percent to face value. It plans to sell a total of 10 billion euros and “run down” a further 20 billion of loans through 2013, Chief Executive Officer Richie Boucher said in April.

In total, the four Irish banks that remain open for business are cutting more than 70 billion euros of assets by the end of 2013 to wean themselves off central bank funding and lower their loan-to-deposit ratios to 122.5 percent from an average 180 percent at the end of last year. The other banks include Allied Irish Banks Plc and Irish Life & Permanent Plc.

Matthew Elderfield, deputy governor of the central bank, said this week the banks face a challenge in selling off more assets as other European lenders make disposals.

“The next two years will be more of a challenge,” Elderfield said in an interview with CNBC Television. “Across Europe, there is the capital raising exercise done by the European Banking Authority, which means a lot banks will be selling assets into that market at the same time,” he said.

--Editors: Edward Evans, Jon Menon.

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus