KBC Bank of Ireland (KBC) has announced it will sell €1.1bn of its non-performing loan portfolio, including a small number of non-mortgage and non-performing loans, in a transaction financed by CarVal Investors.
This portfolio of non-performing loans contains home loans and buy-to-let mortgages.
Once this transaction is completed, Pepper Finance Corporation (Ireland) DAC will take over the managing and servicing of these loans on behalf of CarVal.
Pepper is regulated by the Central Bank of Ireland, which means customers will continue to have the same legal and regulatory protections (such as consumer protection code and code of conduct on mortgages arrears) after the sale.
KBC bank has already made an agreement with Bank of Ireland to take on the bulk of its performing loan book, consisting of €9bn performing mortgages.
Both loan sales will advance the bank’s plans to exit the irish market.
What is a non-performing loan?
A loan is typically considered non-performing if it is in arrears for greater than 90 days.
Non-performing can also be applied to a loan if the loan had to be restructured, such as to reduce repayments.
A loan can still be classified as non-performing for a period of time following the resolution of arrears or the completion of a restructure.
I have a KBC bank loan in arrears but I am making reduced repayments, do I need to do anything?
No, customers do not need to take any action. KBC bank will be in touch with customers impacted, at least 60 days before the transfer, if their loan is included in the sale.
All regulatory protections will continue to apply, which means all the terms and conditions of your loan will continue.
You should continue to make your agreed repayments in the meantime.
What about fraud following this announcement?
All banks advise customers to be aware of fraud. Given this is a new announcement, all KBC customers should be extra vigilant regarding any communication received over the coming weeks.
Fraudsters may attempt to exploit the situation by making calls claiming to be KBC and that you need to register your details or re-register your information. Do not entertain this communication.
Never provide personal information over the phone. If in any doubt, hang up the call and phone your bank. Banks never call looking for PIN numbers, user IDs or passcodes to complete transactions.
KBC bank entered the Irish market in 1978 by acquiring Irish Intercontinental Bank (IIB) and had to inject €1.4bn into the bank during the financial crisis as loan losses soared.
The bank returned to profit in the first half of this year, announcing a €21m net profit with loan impairment charges falling to zero.
In comparison, the bank made a loss of €58m for the same period last year, mainly due to a €95m loan charge to allow for a spike in bad debts as a result of COVID-19.
KBC bank group CEO Johan Thijs said the non-performing loan sale allows the bank to "clean up legacy and further reduce its non-performing loans ratio".
KBC Bank of Ireland CEO Ales Blazek said: "I am confident that the agreement offers a good and sustainable solution for our non-performing mortgage loan customers. Affected customers will be contacted shortly regarding concrete steps related to them."