The loans are part of Suncorp’s ‘Non-core’ portfolio of bad debts, which was initiated in 2009 following the global financial crisis (GFC).
Suncorp’s so-called ‘bad bank’ has been whittled down from $18 billion since it was established.
The Non-core portfolio had an outstanding balance of $2.8 billion at as 31 March 2013.
After “further organic run-off and individual loan sales of $500 million in June and $200 million in July”, Suncorp expects the ‘bad bank’ to have a residual portfolio of $500 million of loans.
As a result of the sale to Goldman Sachs, Suncorp expects the Non-core portfolio to incur an after-tax loss of between $470 million and $490 million in the second half of the 2013 financial year.
Suncorp Group chief executive Patrick Snowball said the bank had “made great progress in transforming and de-risking Suncorp”.
“With the portfolio below $3 billion, the group balance sheet in great shape and a general improvement in funding and capital markets, now was the time to act,” said Mr Snowball.
“This is a significant turning point and the Non-core portfolio will no longer divert attention from the real progress being made across our business,” he added.
The residual $500 million Non-core portfolio will consist of 130 loans with an average loan balance of $4 million, and will be managed as part of the banks overall lending portfolio, according to Suncorp.
The remaining loans are expected to be settled over the 2014 financial year, said the bank.
