BANK DEAL:US PROPERTY investment company Kennedy Wilson is buying a €1.3 billion book of UK commercial property loans from Bank of Ireland with two large institutional investors.

William McMorrow, chairman and chief executive of Beverly Hills-based Kennedy Wilson, said the company’s partners in the deal were European and American.

About 70 per cent of the loans are secured on office, apartment and retail properties in London. The deal is closing in two phases – a payment of €1 billion was made last Friday and €300 million will be paid by the end of the month.

Bank of Ireland disclosed the transaction when it announced earlier this month that it had deleveraged the bank by disposing of about €5 billion of loans – half of it non-core loans – at a discount of 9 per cent on their face value.

Kennedy Wilson is a 0.85 per cent investor in Bank of Ireland as part of the acquisition of a 35 per cent shareholding in the bank led by Canadian company Fairfax.

The deal reduced the State’s stake in the bank to 15 per cent and injected €1.12 billion in capital.

In June, the California company purchased Bank of Ireland Real Estate Investment Management, which manages about €1.6 billion of commercial investment property in Europe on behalf of clients.

Mr McMorrow said his firm’s equity investment was driven by his belief that Bank of Ireland would recover to be the lead bank in Ireland, said Mr McMorrow.

“I really felt that Bank of Ireland had a good opportunity to succeed in the market,” he said.

He praised the bank’s chief executive Richie Boucher in leading the restructuring of the bank.

“This has been an incredibly tough thing for him [Mr Boucher] to do,” said Mr McMorrow.

Mr Boucher, a director of the bank before the banking crisis, faces a fitness and probity test by the Central Bank along with all executive bank directors who intend to stay on.

“I think you are going to look back in three years from now and everyone is going to be praising Richie for the job he did,” Mr McMorrow said.