South African bank Investec is understood to be sounding out prospective buyers for its Australian loan book, thought to be worth about $1bn, as it stages a retreat from the local market.
It is believed that the portfolio comprises a mix of Australian loans, thought to be to private equity firms and on real estate investments.
The move follows a decision by the London and Johannesburg-listed Investec in recent months to make an exit from Australia and instead focus on its core markets after operating here for 23 years.
The transition is expected to happen over the next 12 to 18 months and The Australian reported in December the withdrawal was happening despite Investec reactivating its bank branch status in Australia in 2019 to target additional lending and move back into deposits.
The sale will be the second for Investec of loans in Australia in the space of years after it offloaded its professional finance business to Bank of Queensland in 2014.
The value of Investec’s offering and whether the debt is distressed or being sold at a discount remains unclear.
But the situation comes after a year where some industries have been brought to a standstill amid the pandemic.
It may prompt some to cast their mind back to the last downturn when loan books hit the market in the aftermath of the global financial crisis.
On offer was a portfolio including some bad loans on distressed property developments, written before the GFC by its subsidiary Bank of Scotland International.
Buyers of the assets included Canadian private equity firm Brookfield and US banks including Goldman Sachs and Morgan Stanley.
Like Investec, the sale came as part of a move to retreat from the Australian market, focusing on its core business of corporate lending to major property groups and asset finance.
Yet at that time, companies were caught out by carrying too much debt. Amid the current downturn, companies have been better capitalised.
Investec is among a number of banks to expand into Australia before later opting to withdraw.
British bank Barclays earlier wound down its Australian operations. However, Barclays has recently returned by way of a small investment in Barrenjoey Capital Partners.
Malaysian lender CIMB shut its Australian operations five years ago, while Deutsche Bank also shut down its global equities sales and trading business completely, and a substantial arm of its Australian operations were wound down.
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