In a $1.4 billion deal, Wells Fargo has won the Bank of Ireland’s U.S. commercial-real-estate loan portfolio as the Irish bank attempts to deleverage its assets. The portfolio consists of 25 loans sold at close to face value and backed primarily by properties in New York, Boston and Washington[1]. The Bank of Ireland was ordered by Ireland’s financial regulator to deleverage by cutting the lender’s loan portfolio by $43 billion by the end of 2013. Wells Fargo also purchased an additional $1 billion in loans from Allied Irish Banks earlier this year and is now taking aim at a $9.5 billion portfolio of loans in the offing from the Anglo Irish Bank Corporation. The latter includes commercial “trophy properties” in New York City and Chicago.
JPMorgan Chase and Bank of America are also after the Anglo Irish Bank portfolio and have submitted bids on it[2]. Most of the loans are expected to perform through maturity. The sale will also be the first of its kind, since “this is the first foreign bank to sell its entire U.S. loan portfolio, and it will be good test of the market,” said head of global real estate practice at law firm Greenberg Traurig, Robert Ivanhoe.
Do you think it’s a good thing that American lenders are buying back American loans, or should they be doing other things with these billions of dollars?
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[1] http://retailbanking.banking-business-review.com/news/wells-fargo-buys-14bn-portfolio-of-loans-from-bank-of-ireland-110811
[2] http://therealdeal.com/newyork/articles/banks-and-private-equity-firms-including-the-blackstone-group-lone-star-funds-lnr-property-tpg-capital-begin-tussle-for-anglo-irish-loan-portfolio
It is hard to imagine that loans selected for sale in a bank portfolio could be sold at par! I would think the Irish regulators most likely want them to de-leverage with those credits that have the highest risk not least risk although either way the percentage will drop.
They are doing a disservice to their shareholders. America is an empire in decline and their future prospects are exceedingly dim. They would be better giving excess funds back to their shareholders in the form of dividends which would temporarily boost their shareholders economy.
When the bigger fish think gobbling up the little fish will salvage their business and bad reputation it is the beginning of the end. I have seen too many big corporations go this route to doom. I think the big banks in this country are finished. Had the government not kept them afloat thus far they would already be gone. We claim to be a free market, so why not let the free market work?