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PTSB plan could see bank 'service' €20bn in mortgages

THE 'new' Permanent TSB could become the 'master servicer' for more than €20bn of tracker mortgages set to be taken off the balance sheets of PTSB and AIB, the Irish Independent has learned.

Sources last night confirmed that one of the business plans being considered for an independent PTSB would involve the bank taking over the administration of the loss-making trackers.

Advantages of the plan include giving PTSB's operations a critical mass necessary to sustain its cost base without leaving the bank with a massive balance sheet to fund.

The plan would require PTSB to develop industry-leading practices for dealing with troubled mortgages, something the authorities hope could lead to a better outcome for troubled homeloans.

It would also mean that Irish Bank Resolution Corporation (IBRC), which is expected to take the trackers on to its balance sheet, would not have to build the operational capacity to deal with mortgages.

IBRC has a small mortgage loan book from Irish Nationwide, but its core competences are in commercial lending. PTSB, on the other hand, is primarily a mortgage bank.

A spokesman for PTSB last night declined to comment on any aspects of PTSB's business plan, which was presented to officials from the EC/ECB/IMF yesterday.

Management want the bank to remain independent, with a balance sheet of about €14bn. They believe that, once the bank's future is agreed, it will be able to appoint more senior management and deal more proactively with operational issues like mortgage arrears and mortgage pricing.

The troika may not reach full agreement on all aspects of the 'new' Permanent TSB by the end of next week, but officials are hopeful of agreeing a broad strategy that would enable the bank to begin implementing some of its operational plans.

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