(Alliance News) - AIB Group PLC will sell a GBP600 million portfolio of small and medium enterprise loans in the UK to Allica Bank Ltd, the Dublin-based lender announced Tuesday.
The proceeds received by AIB UK will be used for general corporate purposes, the group noted.
As at June, the loan portfolio had a gross carrying value of around GBP600 million and risk-weighted assets of around GBP400 million. In 2020, the loan portfolio incurred a pretax loss of approximately GBP9 million.
Allica Bank is an SME-focused lender based in London and Milton Keynes.
"This transaction enables AIB UK to reduce both its staff numbers and property footprint and assists in the achievement of around EUR35 million cost savings, thereby marking another significant step in the implementation of AIB Group strategy and the commitment to reduce costs by EUR230 million by 2023," AIB said.
Following the exit from the British SME sector, AIB UK said it will focus on growing its Corporate Banking business to serve companies in its chosen segments, including renewables, infrastructure and real estate.
AIB Group shares were trading 2.1% lower in London on Tuesday morning at 180.40 pence each.
By Will Paige; willpaige@alliancenews.com
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Aib Group (AIBG)