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Orange Bank Commencing Additional Loan Sales; Not A Spread Mover

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  • BBG sources reporting that Orange Bank is selling EUR 1.9bn of loans across three portfolios, mainly home and consumer, as part of their market exit strategy. Follows the signing of a continuity/referral agreement with BNP along with BNP’s purchase of a EUR 700mn consumer finance book from Orange.
  • Binding bids for the loan portfolios are due in May, with interest from firms like AB CarVal, KKR, GoldenTree, and Cerberus.
  • Tesco has, similarly, sold out of its banking business in the UK. It sold GBP8.3bn of loans for GBP600m, so 7.3% of lending but this was almost exclusively high-return consumer loans and was a profitable business. Nonetheless, the book value (capital) underlying those loans was GBP960m so Tesco actually took an accounting loss-on-sale.
  • Looking on a comparable basis this is still well under 1% of Orange equity and so while also likely to incur an accounting loss on sale, is immaterial in the grand scheme of things.
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