LONDON (Reuters) – South African investment bank Investec has sold 540 million pounds ($877 million) of Irish mortgages to US private equity firm Lone Star, marking its second deal this month to get rid of loans it no longer wants.
Investec said on Monday it was selling its Irish home loan business Start Mortgage and some other Irish mortgage assets to an affiliate of Lone Star Funds.
It said the deal was part of its plan to simplify and reshape its banking business. It follows the sale last week of its UK mortgage business Kensington for 180 million pounds to private equity firms Blackstone and TPG.
Investec has been dogged by a sharp fall in property prices in Ireland as the country was one of the worst casualties of the euro zone crisis, and has been forced to take substantial impairment charges for its losses there.
Investec said the business being sold had gross assets of 540 million pounds and about 70 employees, and made a pretax loss of 21 million pounds in the year to the end of March.
It said the sale of the Irish loan book would have a marginal negative impact on capital ratios but, together with the sale of Kensington and its struggling Australian professional finance and leasing arm in April, its common equity Tier 1 ratio would improve to 11.1 per cent from 8.8 per cent on a proforma basis as at the end of March.