AIB Group plc (ISE:A5G) is in the market looking to sell up to €500 million of problem loans, mainly comprising mortgages. The so-called Project Bay portfolio includes loans deep in arrears as well as restructured, or reperforming, debt where borrowers are meeting eased terms but which AIB must continue to classify as non-performing under strict regulatory criteria, according to sources. First-round bids are due imminently, with final bid expected to be called in October 2021. An AIB spokesman declined to comment on the loan sale. However, he said that "notwithstanding the considerable progress" the bank has made in reducing non-performing exposures (NPEs) from €31 billion in 2013 to €3.8 billion, or 6.5% of gross loans, as of the end of June, the problem loans ratio "remains elevated and we are committed to reaching an NPEs to circa 3%, which is more in line with European levels. In line with regulatory requirements, European banks are obliged to classify certain loans as NPEs for a variety of reasons".