Ulster Bank is endeavouring to finalise the securitisation of the latest tranche of its Irish non-performing commercial property Loan Book, of €1.7bn – termed ‘Project Aran’.

Project Aran is euphemistically named after the rugged and tranquil islands constituting the Barony of Aran at the mouth of Galway Bay.
It is estimated that Project Aran’s underlying property lending is split c.76% Republic of Ireland, c.21% Northern Ireland, and c.3% the rest of the UK.In addition, there is understood to be progressing bids by underlying borrowers who are seeking to re-purchase their debt.
It has also been reported that Ulster Bank’s legacy Irish and UK commercial real estate loan exposure was transferred into RBS’ newly-created internal ‘bad bank’, RBS Capital Resolution (RCR), at the turn of the year.
Project Aran’s €1.7bn-sized NPL priced between €500m and €600m in the first round, reflecting a circa 65% to 70% discount.
A blended discount at the same range on the enlarged €6.0bn Project Aran would imply a purchase price of between €1.8bn and €2.1bn, although there is no certainly at this stage the pricing would be consistent. The sale of Project Aran to Lone Star, Cerberus or CarVal’s consortium would ‘dispose’ of the bulk of Ulster Bank’s remaining commercial property lending exposure.
It was reported four months ago, in October 2014, that the High Court granted an ex parte interim injunction preventing the sale of Ulster Bank’s Pool E loan tranche in Project Achill, after the borrower requested a hearing to establish whether the interest rate swap mis-selling claim must be settled first.
Vierai Ltd and European Property Fund plc, two wholly-owned companies of Michael and Rick Larkin, secured the freezing order the sale of the €87m loan tranche.
The legal action was initiated in mid-June 2014, with the two companies seeking €40m in damages. The interest rate swaps are understood to have now expired. It is understood that Ulster Bank, the RBS subsidiary, was not notified that a freezing order was being sought prior it being secured . All parties declined to comment on the settlement outcome.