Cerberus can’t stop its Irish shopping spree

While the €1.6 billion Project Eagle sale of Nama’s Northern Ireland-secured loans to Cerberus remains dogged by controversy and allegations concerning the sale process, the US investment firm ploughs on in Ireland regardless.

The controversy doesn’t appear to have sated its appetite for Irish deals a whit. Cerberus likes it so much here, it simply can’t stop buying Irish assets.

On Monday it was confirmed as the buyer for the €2.5 billion Project Oyster portfolio from Ulster Bank which includes business loans and mortgages on both sides of the Border but predominantly in the South.

It has done plenty of business with Ulster before, such as when it bought its massive Project Aran portfolio of Irish loans with a face value of more than £4.5 billion. It also paid Ulster £225 million for Project Finn.

And, in addition to Eagle, it also paid €800 million for Nama’s Project Arrow.

And if Cerberus isn’t doing deals for Irish loans, it is buying loans elsewhere and locating them in Ireland.

Lloyds is long gone out of the Irish market after winding down its Bank of Scotland (Ireland) subsidiary. The British bank, however, has sold some pretty chunky portfolios to the US firm, all of which are now domiciled in Irish units of Cerberus. These include more than €3 billion worth of loans in Lloyds’ projects Hampton, Avon and Thames.

It has also purchased several enormous portfolios from National Australia Bank – projects Henrico and Chestnut – as well as the £1 billion Project Carlisle from Nationwide building society.

Dublin is now the hub of Cerberus’ European distressed loans empire, with, at the latest count, 17 companies registered here to manage its various portfolios.

Most of these operate as tax-efficient section 110 outfits, although controversies about so-called “vulture funds” using section 110s to avoid tax on Irish deals have prompted the Government to close that loophole. It can still avoid tax here on loans secured on properties abroad, however.

All told, Cerberus has domiciled more than €20 billion of European loans in Ireland. That’s quite a confident bet on the stability of the Irish regime.

Meanwhile, the Oyster deal announced yesterday includes about 900 residential loans secured on owner-occupier properties. This isn’t the first tranche of Irish home loans it has bought as Finn also included residential loans.

The spotlight that has fallen on Cerberus due to Project Eagle will, surely, be twice as bright when observers are scrutinising its treatment of homeowners.