KBC Bank Ireland has reached an agreement to sell its non-performing mortgage loan portfolio of roughly €1.1bn to funds managed by CarVal Investors.

Under the agreement, Pepper Finance, which is regulated by the Central Bank of Ireland, will manage the loans upon the completion of the deal.

KBC Bank Ireland expects to clean up its legacy and further reduce its NPL ratio through the transaction.

The loan portfolio consists of a private dwelling house (PDH), buy to let (BTL) and a small number of non-mortgage non-performing loans.

The lender said that there will be no immediate change for customers, and they do not need to take any action.

Additionally, KBC Bank Ireland will contact the customers whose loans are included in the sale and inform them about the transfer.

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By GlobalData

The deal, once completed, will mark KBC Group’s exit from the Irish market.  It had forayed into Ireland in 1978 through the acquisition of the Irish Intercontinental Bank (IIB).

KBC Group CEO Johan Thijs said: “In the past few years, KBC Bank Ireland already gradually built down its legacy non-performing corporate loan portfolio and buy to let mortgage loan portfolio in Ireland. These sales have now been complemented with the sale of substantially all of the remaining non-performing mortgage loan portfolio.”

KBC Bank Ireland CEO Ales Blazek said: “I’m confident that the agreement we have signed for the sale of substantially all of the remaining non-performing mortgage loan portfolio, and with Pepper managing the loans post-completion, offers a good and sustainable solution for our non-performing mortgage loan customers.”

In April this year, KBC Bank Ireland reached a memorandum of understanding (MOU) with Bank of Ireland for the sale of all of its performing loan assets and liabilities.