National Australia Bank (NAB) has announced the sale of a £1.2bn UK non-performing loan portfolio to an affiliate of Cerberus.
As a result of the sale, the bank said its UK commercial real estate portfolio would be reduced to £836m from £5.6bn when it was established over two years ago. The sale also reduced the amount of high risk loans on the portfolio by 93%.
It said a small gain would be recognised in its March 2015 half-year accounts from the sale and £127m of capital would be released for the group when the transaction is closed. The loans were mainly defaulted, watch and high loan-to-value loans.
NAB Group chief executive Andrew Thorburn hailed the sale as an “important step forward”.
“The sale of these higher risk loans in the NAB UK CRE portfolio is another important milestone in our strategy of reducing our low returning legacy assets and sharpening our focus on our core Australian and New Zealand franchises,” he said.
It follows the sale of NAB’s £625m Project Chestnut portfolio in the summer, which was also bought by Cerberus.
Thornton said other options were being explored with regards to the rest of the portfolio.
“Pleasingly the remaining NAB UK CRE loans are largely strong performing loans, and we will look at other options to manage this small remaining portfolio,” he said.
The NAB UK CRE business segment will no longer be reported as a separate line of business in the NAB accounts.