Permanent TSB (PTSB) is to restructure its loss-making €5bn buy-to-let mortgage portfolio in a move that will affect thousands of investors.
The Irish Independent has learned that the state-owned bank is speaking with buy-to-let clients who are in arrears and will begin moving on properties where investors are facing an "overwhelming challenge" to meet repayments.
It's understood that the bank has decided that only buy-to-let loans with 18 years or less left on their term, coupled with a loan-to-value of 160pc or below, are likely to have any hope of a successful long-term outcome.
That means the bank is pricing in a recovery in the property market in that period.
But ratings agency Fitch predicted this week that Irish property prices could fall by another 20pc over the next two to three years.
That comes on top of the near 50pc drop in property prices since the peak of the housing boom.
Headed by Jeremy Masding, state-owned PTSB has about 18,000 buy-to-let mortgages on its books, with a face value of about €5bn. That's about 20pc of PTSB's total €26bn mortgage loan book. A third of PTSB's buy-to-let mortgages and 20pc of its residential mortgages are in arrears. That means PTSB is in the worst position of any Irish lender.
"We believe that we can reach bespoke arrangements with individual buy-to-let customers who are in arrears which we can then review with them on a regular basis to ensure that they remain relevant to what those customers require and can finance," said a PTSB spokesman.
"There is no single solution that we're applying – the proposals will vary from customer to customer." He added that the bank was also identifying buy-to-let customers who have refused to engage with the bank over a prolonged period or who are facing "an overwhelming challenge".
He declined to confirm any of the specific details of PTSB's planned loan restructuring.
PTSB sparked outrage in 2011 when it began moving investors who had been on interest-only tracker, buy-to-let mortgages to interest and capital repayments.
They were told they'd lose their tracker rates if they didn't start paying back principal as well and would be put on a much higher variable rate. The changes saw some payments on investor loans triple.
It is understood that the bank is now planning to move some affected customers back from interest and capital repayments to a three-year interest only plan. It's not clear at this stage whether that interest rate will be higher than the original rate they may have been on.
In a letter seen by the Irish Independent, Mr Skoczylas said legal action would be taken to try a block the sale.
He is part of a group of shareholders in the former Irish Life & Permanent Group who opposed the nationalisation of the company last year.
The group wrote to the minister last week threatening action if the plan to sell Irish Life was not shelved. They said an Irish Life sale would be illegal as long as ownership was in dispute.
Lawyers for the Finance Minister dismissed the claims as "a myriad of ill-conceived, baseless allegations".