Two arrested in probe into Irish "bad bank" loan sale

BELFAST, May 31 (Reuters) - Two men have been arrested in Northern Ireland as part of an investigation into a 1.3 billion pound sale of property loans by Ireland (Other OTC: IRLD - news) 's state-owned "bad bank" to a U.S (Other OTC: UBGXF - news) . private equity firm, British authorities said.

Northern Ireland police opened a criminal inquiry last year into the sale by Ireland's state-run "bad bank", the National Asset Management Agency, of its entire portfolio of loans belonging to Northern Ireland-based debtors to U.S. private equity firm Cerberus Capital Management.

The investigation was begun after an independent member of the Irish parliament, Mick Wallace, raised concerns about the portfolio, alleging that a 7 million-pound fee had been "earmarked" for a Northern Ireland politician.

The National Crime Agency said in a statement it arrested two people and carried out searches in the County Down area of Northern Ireland "in connection with a fraud investigation".

A spokesman said the arrests were the first in the investigation into the NAMA loan sale to Cerberus but declined to give any further details.

Cerberus has said that no improper or illegal fees were paid by it or on its behalf. NAMA says the police investigation has not suggested it behaved improperly.

NAMA is one of the world's largest property groups, having paid a total of 32 billion euros to purge Irish banks of risky loans worth over double that amount following a crash that forced Ireland to seek an international bailout.

The Northern Ireland portfolio was one of a series that has been sold by the agency in recent years. (Reporting by Amanda Ferguson; Writing by Conor Humphries)