Ulster Bank has sold 900 owner-occupier mortgages, which are on the brink of repossession, to US investment firm Cerberus.

The bank today completed the process of selling the loans, as part of a much larger disposal of distressed borrowings.

95% of the mortgages are two years or more in arrears, while all of the loans are the subject of legal action by the lender.

Ulster Bank said the sale of the portfolio, known as Project Oyster, would enable it "to strengthen its balance sheet for the benefit of its customers and provide much needed competition in the Irish banking market".

Typically mortgages of this kind are bought by foreign funds at substantial discounts. How the homeowners will be dealt with will be up to Cerberus.

The amount paid by the US firm to acquire the loans has not been disclosed.

The loans are part of a larger portfolio, which had a face value of €2.5 billion.

€2.15 billion of the loans are based in the Republic of Ireland, with the remainder (about €300m) based in Northern Ireland.

Around 2,000 buy-to-let mortgages are understood to be included in the portfolio.

More than 70% of the loans consist of commercial loans, mostly lent to small businesses that had engaged in some property development.

About 5% of the loans were given to farmers, though many were not secured on farms.

Ulster Bank said the existing rights of borrowers will transfer with the sale.

The lender said it would be in contact with affected customers "in the coming days to help them as their loans transition to their new owner".