The chief executive of KBC Bank Ireland, Peter Roebben, has strongly indicated that KBC Bank Ireland may now sell legacy problem mortgages. Mr. Roebben is considering this option in order to avoid being forced by financial regulators to have more higher priced capital on standby against these potential loans.
Elaborating on the subject, Mr. Roebben stated that the bank postponed making this decision earlier for a long time, instead favoring working with their customers to fix the issues at hand.
Unfortunately, Mr. Roebben stated that the bank potentially faced having to set aside massive amounts of capital against these loans if the European Central Bank (ECB) moved forward with their plans to make banks take more provisions to safeguard against legacy non-performing loans. He stated that if the ECB enacted these plans, it will force the bank to once against look at their non-performing book.
These statements by Mr. Roebben haven showcased how his stance on non-performing loan sales has changed since he first became the chief executive of KBC Bank Ireland back in May 2019. Before Mr. Roebben became the head of KBC Bank Ireland, he worked as an executive for KBC Group over practically three decades.
When Mr. Roebben was only weeks into his role as the chief executive of KBC Bank Ireland, he stated that he did not conceive that the bank would sell Irish private home loans. His stance on the matter changed earlier this year in February when he stated that the bank was open to a potential loan sale. Furthermore, he stated that KBC Bank Ireland has to monitor the bank environment as well as regulators’ expectations, all the while developing a strategy to restructure the bank’s soured debt.
KBC Bank Ireland has a significant amount of impaired loans at the moment, mainly consisting of owner-occupier mortgages. To be specific, KBC Bank Ireland has over €1.5 billion in impaired loans which is equal to 15% of its entire portfolio.
Although this is the highest non-performing loans ration across all Irish banks, the KBC has the most rigid classification of problem loans in the entire market.
Many Irish banks have started selling owner-occupier loans over the past 2 years. This selling trend has been happening while many of the same Irish banks are dealing with a whole host of tricky mortgage cases.
This article was written by Ian, an intern at Irish Mortgage Brokers and Yes.ie from the USA.