DUBLIN |
Fri Oct 14, 2011 2:57pm EDT

DUBLIN Oct 14 (Reuters) – Bank of Ireland said it
has sold or accepted repayment of 5 billion euros ($6.94
billion) of loans in the United States, Britain, Europe and the
Middle East at a discount of around 9 percent, putting it on
track meet its targets under an EU-IMF bailout.

Ireland’s government pledged to radically shrink its
domestic banking sector after a disastrous binge on property
loans, and Bank of Ireland, the country’s largest lender, is to
sell 10 billion euros in loans and accept repayment of another
20 billion euros worth by the end of 2013.

Bank of Ireland, the only domestic lender to avoid falling
into state control, said it had raised 4.54 billion euros from
the sale of the loan books, a higher price than expected,
meaning there was no impact on its core tier one ratio.

Bank of Ireland had a pro forma core tier one ratio, a key
measure of financial strength, of 15.4 percent at the end of
June.

Ireland’s banks need to shrink their loan books to reduce
their dependence on emergency funding from the European Central
Bank and the Irish central bank, which at the end of September
stood at 153.6 billion euros.

Bank of Ireland needs to dispose of another 5 billion euros
worth of loans by the end of 2013, and it said it was making
good progress.

It said it was in advanced talks with potential purchasers
of project finance loans.

The loans already sold include a U.S. commercial real
estate portfolio valued at $1.13 billion, some 1.33 billion
pounds of UK commercial property loans sold to Kennedy Wilson
and institutional partners for 1.07 billion pounds, and 1.23
billion pounds of British residential mortgages sold to a unit
of Britain’s Nationwide Building Society for 1.13 billion
pounds.

Bank of Ireland also sold a portfolio of project finance
loans with total commitments of 670 million euros to GE Energy
Financial Services . The loans relate to a portfolio of
energy assets across North America, the UK, continental Europe
and the Middle East.

The group also accepted repayment of some 700 million euros
of loans at or close to par in its UK corporate banking
division.

Thu Oct 13, 2011 7:34pm IST

(Corrects third paragraph to remove PKO from the list of
lenders who underwrote the bridge)

By Isabell Witt

LONDON Oct 13 (Reuters) – Banks leading the $4.9 billion
multi-currency debt financing for the buyout of Polish phone
company Polkomtel have been exploring raising more term loans to
replace a senior secured high-yield bond bridge, banking sources
said on Thursday.

Raising new loans would take further pressure off the banks
to sell the 1.75 billion zloty ($562 million) bond as credit
market conditions for high-yield issuers remain difficult.

Credit Agricole, Deutsche Bank, Royal Bank of Scotland and
Societe Generale underwrote the bridge to bond in July to back
Polkomtel’s buyout by Polish billionaire Zygmunt Solorz-Zak.

The bookrunners are sounding out other banks to see how much
in term loans they can raise in addition to the 1.9 billion euro
($2.6 billion) equivalent they already raised in August, the
sources said.

At the time, the loan attracted strong demand from Polish
and other international banks, despite the difficult market
conditions over the summer due to worsening euro zone sovereign
debt crisis.

The loan was twice oversubscribed, with almost 25 other
banks including PKO BP joining the transaction, following an
upsize of 300 million euros, according to Thomson Reuters LPC
data.

In addition to the 1.75 billion zloty secured bridge to bond
and the 1.9 billion euro senior term loans, the total debt
package also includes a 900 million euro subordinated bridge to
high-yield bond and a 352 million euro Payment-in-Kind (PIK)
note, according to Thomson Reuters LPC.

The PIK could be reduced by around 125 million euros after
an investment from The European Bank of Reconstruction and
Development (EBRD), which is pending approval.

Polkomtel could not immediately be reached for comment.
($1 = 3.112 zlotys = 0.725 euro)

(Reporting by Isabell Witt; Editing by Erica Billingham)

Japan’s bank loans increased in
September for the first time in almost two years as the
country’s biggest earthquake and tsunami spurred lending for
reconstruction.

Lending by 119 local banks led by Mitsubishi UFJ Financial
Group Inc. (8306)’s unit rose 0.1 percent to 420 trillion yen ($5.5
trillion) as of Sept. 30 from a year earlier, the Japanese
Bankers Association said in a statement today, the first year-
on-year increase in 23 months.

Mitsubishi UFJ Chief Executive Officer Katsunori Nagayasu
was among forecasters who predicted a recovery in lending
following the magnitude-9 quake and tsunami on March 11. The
rebound comes as Europe’s sovereign debt crisis raises concerns
of slowing global economic growth and casts doubt on the health
of some financial institutions.

“Regional banks are expanding loans to local
municipalities, which seem to be shifting to bank loans from
bond sales,” Katsuhito Sasajima, a Tokyo-based bank analyst at
JPMorgan Chase Co., said before the release of today’s
statement. “To make this loan recovery sustainable, Japan needs
much stronger lending requirements along with reconstruction
efforts after the quake, and real growth in corporate capital
spending.”

Major commercial banks such as Mitsubishi UFJ and its rival
Sumitomo Mitsui Financial Group Inc. (8316)’s banking unit lent 177.4
trillion yen as of Sept. 30, down 2.1 percent from a year
earlier, the lobby group said. Lending by 63 regional banks
increased 2.1 percent to 158.3 trillion yen, the report shows.

The disaster triggered explosions at Tokyo Electric Power
Co.’s nuclear plant in Fukushima, northern Japan, and led to
reactor meltdowns. The country’s worst atomic plant incident
hampered the operations of other reactors nationwide, making it
difficult for utilities to sell bonds and instead prompting them
to rely on loans.

Japan’s top five power companies and nuclear-plant
operators are seeking a record 4 trillion yen in loans this year
in part to finance rising costs for natural gas and coal, the
two main thermal power plant fuels. That amount includes an
emergency loan of about 2 trillion yen to Tokyo Electric granted
immediately after the accident.

The Bank of Japan will unveil its lending data for
September on Oct. 13. It uses a different method of analysis.

To contact the reporter on this story:
Shigeru Sato in Tokyo at
ssato10@bloomberg.net.

To contact the editor responsible for this story:
Chitra Somayaji at
csomayaji@bloomberg.net.

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