Suncorp starts “bad bank” loan sales
(14 June 2013 – Australia) Suncorp Bank has sold A$1.6 billion worth of loans from its "bad bank" to Goldman Sachs for 60 cents in the dollar.
In a move to clean up the billions of dollars in bad commercial property loans during the GFC, Suncorp split its lending arm into good and bad banks in 2009.
On Thursday, the bank announced plans to run the poorly performing assets down by 2014 – in moves that will lead to an after-tax loss of profits.
"Resolving the Non-core portfolio over the past four years has been a difficult and challenging experience for the board, Suncorp management and, of course, our shareholders," Chairman Ziggy Switkowski said.
"The reducing scale of the Non-core portfolio and the strength of the Suncorp Group have allowed us to act decisively at this time to remove the Non-core portfolio risk."
At the end of May the 'bad bank' held A$3.4 billion in loans, but on Thursday it announced detailed plans to remove these assets from its balance sheet.
As well as the A$1.6 billion in loans that Suncorp plans to sell to Goldman, a further A$700 million in loans will be sold or run off its books organically by July.
This will leave the bank with A$500 million in loans in the troubled portfolio, which it expects to settle over 2014 financial year.
Chief Executive Patrick Snowball said the deal had removed a key distraction for the company.
"This is a significant turning point and the non-core portfolio will no longer divert attention from the real progress being made across our business.'
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