UPDATE 1-AIB to plug pension hole with 1.1 bln-euro loan transfer
* Discount on loans not disclosed, within stress test assumptions
* Deal brings bank to 76 percent of deleveraging target
DUBLIN Aug 17 (Reuters) - Allied Irish Banks is to use loans with a face value of 1.1 billion euros ($1.4 billion) to help reduce a shortfall in its pension scheme in a move which will also help bring it closer to its target of cutting the size of its balance sheet by 20.5 billion euros.
The transfer, which will be completed in the coming months, will bring the bank's total non-core deleveraging to 15.5 billion euros, or 76 percent of its 20.5 billion euro target set under the terms of Ireland's bailout, the bank said in an emailed statement.
The bank did not say how much of the face value of the loans would be written down under the independent valuation by pension fund trustees, but said losses were in line with the levels assumed by stress tests carried out last year.
The transaction will "assist" in addressing the deficit in the bank's pension scheme, which was 1.46 billion euros at the end of June.
Having set the state back 20 billion euros, the most handed out to any lender still open, Allied Irish is in the process of closing nearly a quarter of its branches, axing 2,500 jobs - almost 20 percent of its workforce - and cutting salaries by up to 15 percent in a bid to return to profitability by 2014.
AIB said it expects to have completed a substantial majority of its 20.5 billion-euro deleveraging target by the end of 2012.
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