AIB has completed a second deal in 13 months to shift some bad-loan risks off its balance sheet in a move that frees up expensive capital and underpins future payouts to investors.
The bank has carried out a so-called significant risk transfer agreement (SRT) on a portfolio of €2 billion of mortgages. It follows a similar deal involving €1 billion of corporate loans in November 2024.
Both transactions have seen groups of institutional investors take on part of the risk of losses on the loans in the portfolios for an extended period of time, reducing the level of capital the bank needs to hold in reserve against the loans. The investors receive an annual interest payment for taking on the risk.
AIB has previously said that it plans to carry out a number of such deals to improve the efficiency of its balance sheet.
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“The reduction of risk weighted assets through the execution of this SRT enhances capital efficiency,” said AIB chief financial officer Donal Galvin, adding that it adds a quarter of a percentage point to its common equity Tier 1 capital (CET1) ratio, a key measure of financial strength. “AIB remains strongly capitalised and comfortably ahead of minimum capital requirements.”
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AIB’s CET1 ratio stood at 16.6 per cent at the end of September, well ahead of its target of maintaining a figure of more than 14 per cent and a minimum ratio of 11.3 per cent imposed by regulators.
“AIB enters 2026 from a position of strength, providing clarity and stability for investors,” said Denis McGoldrick, an analyst with AIB-owned Goodbody Stockbrokers.
The SRT market has become an increasingly popular route for European banks over the past decade to temporarily share the credit risk on pools of loans with global investors.
AIB’s main rival, Bank of Ireland, has carried out a number of similar credit-risk transfer deals since 2016, covering Irish business loans, mortgages, project finance loans and British corporate and leverage acquisition finance exposures.
