Business Irish

Monday 21 October 2019

Permanent TSB to sell non-performing loans to Lone Star affiliate

PTSB chief Jeremy Masding
PTSB chief Jeremy Masding
Ellie Donnelly

Ellie Donnelly

Permanent TSB has agreed to sell its non-performing loan portfolio, "project Glas", to the retail credit firm Start Mortgages, an affiliate of Lone Star Funds.

Following the transaction Permanent TSB's non-performing loans will reduce from 25pc to 16pc of its overall customer loan book.

The portfolio has a gross balance sheet value of around €2.1bn and a net book value of €1.3bn.

In the year to December 2017, the loan portfolio generated operating income of €8m.

PTSB will receive cash consideration of €1.3bn for the loans.

The proceeds will be used for general corporate purposes.

Jeremy Masding, chief executive of PTSB said that protections which exist for homeowners transfer with a loan when it is sold.

"Customers will continue to be afforded the protection of existing regulatory protections after the transfer," Mr Masding said.

In addition, Mr Masding said that the bank remained committed to reducing its non-performing loans ratio to single digits in the near term, saying: "reducing NPLs is a necessary step for us to take to complete the rebuilding of PTSB as a viable, competitive lender."

State-backed PTSB came under heavy criticism in February when it first unveiled the mega home loan sale, prompting CEO Jeremy Masding to insist the bank had little choice but to purse a loan sale.

At an Oireachtas Finance Committee hearing, he claimed the lender faces mounting regulatory pressure to reduce the bank's bad-debt ratio from 26pc at the end of 2017 to the EU average of about 5pc.

Despite a political backlash at the decision to flog owner-occupier loans to so-called vulture funds - in the largest sale of its kind by a bailed-out Irish bank, Mr Masding argued it is "very much in the State's interest that the bank manages its non-performing loans down to a tolerable level".

PTSB was advised on the transaction by EY and Mason Hayes & Curran.

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