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Sunday 23 September 2018

Explainer: How Permanent TSB’s decision to sell €4bn of loans could affect you

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PTSB chief Jeremy Masding
Independent.ie Business Desk

Independent.ie Business Desk

State-backed Permanent TSB sparked outcry yesterday when it was revealed that it was to sell a €4bn portfolio of non-performing loans. But what does this mean for people who have such loans?

What are non-performing loans?

A non-performing loan is a loan that is in default or close to default.

What is the level of non-performing loans that PTSB has on its books?

Non-performing loans represent 28pc of the banks loan book – the highest among Irish lenders. A successful deal would reduce that figure to close to 10-12pc.

How many households could be impacted?

As many as 20,000 mortgages of struggling homeowners will be affected, with the move potentially leaving vulnerable borrowers at the mercy of global private equity funds and distressed debt investors.

Will other banks follow suit?

The move by PTSB paves the way for other banks, such as part-nationalised AIB to follow suit.

Did the Government know about the decision?

It is understood that the Government was aware of this politically sensitive loan sale ahead of its formal launch by the bank yesterday.

Sources told the Irish Independent yesterday that Minister for Finance Paschal Donohoe had warned Cabinet colleagues to expect a major story relating to a bank selling off loans to break in the coming days.

Who is expected to buy the loans?

A number of private equity firms, investment banks, and domestic lenders are shifting through the assets, with Bank of Ireland understood to be among the long list of potential suitors.

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