AIB is poised to sign off on a controversial €1bn sale of bad loans, including mortgages, to US fund Cerberus, it is understood.

The sale, dubbed Project Beech, is AIB’s biggest to date and is mainly of mortgages and business loans in deep arrears. The US fund will pay around 30 cent in the euro for loans with a face value of €3bn. Sources confirmed the sale has progressed to its final stages, despite doubts in the market about the impact of Brexit and around proposed legislation that may restrict loans sales in future.

Cerberus has seen off competition from rivals Lone Star and a joint bid from Goldman Sachs and CarVal. In a separate deal in May last year a consortium led by Cerberus bought AIB’s Project Redwood loan portfolio – made up of bad loans including buy-to-let mortgages with a face value of €1.1bn.

AIB, led by CEO Colin Hunt,  has driven ahead with the Project Beech sale despite uncertainty over Brexit.

It is on course to complete the deal this month, though it may be delayed slightly. The bank is selling off bad loans under pressure from European regulators to reduce its stock of so called non-performing exposures to the euro-area average – now under 3.5pc compared to around 11pc at AIB.

Other banks are doing the same, Bank of Ireland has earmarked between €600m and €800m of buy-to-let mortgages to sell or securitise.

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