Allied Irish Banks Plc has picked Goldman Sachs Group Inc., Lone Star Global Acquisitions Ltd and Cerberus Capital Management LP for the final round of bidding for a portfolio of soured commercial real estate loans and residential rental mortgages, the Irish Independent reported Feb. 23.

The loans in the portfolio, dubbed Project Redwood, were once worth €3.7 billion.

The majority state-owned bank is believed to have imposed tough conditions for the sale and is requiring the successful bidder to have a regulated lending entity in Ireland. Both Lone Star and Cerberus own banking entities, or retail credit firms, that are authorized by the Central Bank of Ireland, according to the report.

The sale is part of AIB's plan to reduce nonperforming loans to between €3 billion and €4 billion by 2019-end and boost the asset quality of its balance sheet amid mounting pressure from European regulators for Irish lenders to write off their soured loans.