AIB sat­is­fied with ac­count­ing method on loan sale to Cer­berus

The Irish Times - Business - - BUSINESS NEWS -

AIB says it is com­fort­able with the way in which it ac­counted for a €140 mil­lion profit on the €1.1 bil­lion sale of a group of bad loans to US com­pany Cer­berus.

A re­port in the Fi­nan­cial Times said AIB recorded the €140 mil­lion on the loan sale af­ter us­ing tran­si­tional ar­range­ments al­low­ing the bank to shift to a new in­ter­na­tional ac­count­ing stan­dard, IFRS 9.

The re­ports stated that the bank booked the profit on the loan sale but in the small print said that it had taken ad­van­tage of the IFRS 9 con­ces­sion to ex­clude losses of €271 mil­lion, rais­ing con­cerns that it may have sold the debts at a loss.

How­ever, AIB said the €271 mil­lion pro­vi­sion was due to the ex­pected life­time losses un­der IFRS 9, while the €140 mil­lion gain was re­lated solely to the sale of the loans.

“These are two sep­a­rate and un­re­lated events and we are very com­fort­able with our ac­count­ing treat­ment of these and all re­lated mat­ters,” AIB said in a state­ment.

The bank pointed out that the tran­si­tion to IFRS 9 had a min­i­mal im­pact on the loans that it sold to Cer­berus.

It added that the gain was not re­lated to, or a re­sult of, the tran­si­tion to IFRS 9.

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