Icelandic bank Landsbanki has asked for a representative sample of Irish Nationwide's commercial property loans so it can assess the quality of its loan book before progressing with a bid for the building society.
The bank, which is one a number of parties assessing possible bids for Irish Nationwide, has sought a sample of its commercial loans by type and location in light of the slowdown in the British commercial property. The credit crunch has affected the availability of finance for large transactions and this has had a negative effect on the commercial property market.
Landsbanki, which has been viewed as a frontrunner to buy the business, has been carrying out due diligence on the building society for several months but the recent volatility in the financial markets has prompted it to look for more detailed financial information on the society.
The bank has been particularly keen to assess some of the loans provided by Irish Nationwide to property developers who are heavily involved in developing sites in and around London.
Sources close to the building society played down the significance of Landsbanki's request, saying it was part of its due diligence on the building society.
Irish Nationwide expects the sale to be completed soon; however, a sale is unlikely to be finalised this year. Market volatility and the declining value of financial stocks is expected to bring down the purchase price, with any bidder unlikely to table as high an offer as they would have considered two months ago.
Sources close to the sale process believe the building society, if sold now, would sell for a figure towards the lower end of the €1-1.5 billion scale, well below the society's expectation.
More than 100,000 members will receive a windfall of about €10,000 if the building society sells, though a sale might be delayed until after the credit crunch subsidies. Goldman Sachs is handling the sale process.
Several other bidders have expressed an interest in Irish Nationwide. Landsbanki's Icelandic competitor, Kaupthing, is considering a bid for the society with one of its shareholders, US private equity firm JC Flowers, which pulled out of the auction process for troubled UK lender Northern Rock last week.
