Market updates and sector developments

Barclays Bank Ireland is set to dispose of its performing Italian mortgage portfolio via a securitisation. Funds and accounts managed by GoldenTree Asset Management have entered into a commitment letter under which they will purchase certain notes to be issued by a newly incorporated entity, Miltonia Mortgage Finance, to which the portfolio is expected to be transferred. Upon completion, the Barclays group will hold the most senior class of notes to be issued by Miltonia, in addition to the percentage of notes it is required to retain to comply with its regulatory risk retention obligations.

The transaction values the portfolio at approximately €3.3bn. As a result of the proposed securitisation, Barclays will receive cash proceeds of approximately €400m, including a small deferred consideration element paid from cashflow generated from the portfolio, in addition to the most senior class of notes.

Subject to the satisfaction of certain conditions and finalisation of the transaction documentation, completion of the sale is expected to occur during 3Q24. Upon completion, the portfolio will continue to be serviced by Barclays Europe for a transitional period. At the end of this period, it is intended that servicing of the portfolio will be transferred to a third-party long-term servicer.

The gross asset value of the portfolio is expected to be approximately €3.5bn at completion; it generated a pre-tax loss of circa €20m in the year to 31 December 2023. The transaction is expected to generate a pre-tax loss of approximately €260m for the year to 31 December 2024 and release approximately €900m of risk-weighted assets at completion.

Separately, Barclays is in discussion with certain third parties in respect of the potential disposal of the remaining non-performing and Swiss franc-linked Italian retail mortgage portfolios.

Corinne Smith