Tuesday, April 05, 2011 9:38:19 AM
April 5 2011 reuters
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DUBLIN | Tue Apr 5, 2011 6:35am EDT
DUBLIN (Reuters) - Allied Irish Banks and Bank of Ireland will not transfer some 12 billion euros (10 billion pounds) worth of loans directly to the country's "bad bank" as agreed under an EU/IMF deal, a finance department spokeswoman said on Tuesday. Under an 85 billion euro bailout agreed late last year, Ireland had agreed to extend its purge of risky commercial property loans from lenders to include land and development loans valued at under 20 million euros from its two main banks.
The banks will instead run the loans, with a book value of 12 billion euros, down themselves as part of a huge sector-wide deleveraging process announced last week aimed at trimming lenders down to size and easing them off emergency ECB funding.
"The sub 20 million euro land and development loans in both Bank of Ireland and AIB that had previously been signalled to transfer to NAMA have been identified by the central bank as non-core assets," the spokeswoman said.
A spokesman for the department added that this would not specifically rule the assets out from eventually being sold to the National Asset Management Agency (NAMA), Ireland's state-run bad bank.
NAMA had previously said that including the sub-20 million euro loans, it would spend 37 billion euros acquiring loans with a nominal value of 88 billion euros at the end of its purchase programme, amounting to a discount of 58 percent.
(Reporting by Padraic Halpin; Editing by Carmel Crimmins, David Holmes and Jane Merriman)
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