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Questions for the Permo

THE Government's plans for restructuring Permanent TSB by hiving off up to €12.5bn of its loans to a 'bad bank' raise as many questions as they answer.

What criteria will be used to determine which loans will be transferred to the 'bad bank'? Unfortunately, last week's announcement doesn't tell us.

According to its most recent accounts, the Permo had just over €4bn of impaired loans on its books at the end of December 31, 12 per cent of its total €33.6bn loan book. The accounts also reveal that the vast bulk of the Permo's loans, €22.8bn or 68 per cent, were trackers.

These trackers are costing the Permo an absolute fortune, at least €400m a year and probably more.

Unfortunately, what the accounts don't tell us is what proportion of the Permo's trackers are either in arrears or impaired.

Indeed, it is perfectly possible that while Permo is losing money on its trackers, these are also its best-performing loans as the lower interest rates make them more affordable for homeowners.

By transferring loss-making but compliant trackers to a 'bad bank', would the Permo be getting rid of loans that have the potential to be profitable when funding conditions normalise? The taxpayer, who now owns 99.2 per cent of the Permo, deserves to be told.

Sunday Indo Business