For good or bad, state-owned lender loses out
JEREMY Masding is in an awkward situation to say the least – his bad customers lose the bank money but so do his good ones.
As head of Permanent TSB, the proud Welshman is running a bank that is essentially a mortgage business that has a massive number of customers in arrears.
But many of the customers making payments have tracker mortgages that are so cheap for borrowers that they cost the bank money too.
Then there's the question of how to recover debts from struggling or delinquent borrowers. When he met the press yesterday Mr Masding repeated a number of times that any money Permanent TSB doesn't recoup is money lost by the State.
That is true, but it doesn't mean it would be any less of a public relations nightmare if his state-owned bank begins throwing people out of their homes in the middle of recession.
So Permanent TSB is doing what it can and has effectively split itself into a good bank and bad bank.
The bad bank is made up of a UK business (CHL) and a new asset management unit aimed at working with customers that are in arrears or need their repayments restructured.
The rate of pace of new arrears has slowed but it is too early to say if the plan will be successful.
The good bank is now "open for business" with €450m available to lend, but it is unlikely to be profitable before 2016.
Net interest margin, the difference between what it receives in interest and what it pays, is a paltry 0.72pc.
Include the bank's two other units and it will be several more years before a profit is on the cards.