Sunday 22 April 2018

Permanent TSB presses on with vultures sale despite pledge from Taoiseach to help families

Some 14,000 home loans to be sold despite pledge from Taoiseach to help families

Permanent TSB confirmed it intends to sell 18,000 ‘bad’ residential mortgages to private investors. Stock photo: PA
Permanent TSB confirmed it intends to sell 18,000 ‘bad’ residential mortgages to private investors. Stock photo: PA

Gretchen Friemann, Kevin Doyle and John Downing

Permanent TSB is ploughing ahead with a €3.8bn sale of impaired home loans despite a pledge by Taoiseach Leo Varadkar to strengthen protection measures for mortgage holders.

The State-backed bank confirmed it intends to sell 18,000 'bad' residential mortgages to private investors even as a political backlash against the move intensifies.

The bank said the vast majority at 14,000 are tied to owner-occupier mortgages or private dwelling homes, with the remainder made up of soured buy-to-let loans.

The move comes despite Mr Varadkar insisting there is time to put in place "any new additional protections" needed to reassure PTSB mortgage holders.

Under fire from Fianna Fáil, he vowed to strengthen protection measures for mortgage holders who could be affected by the sale of the PTSB loan book to a vulture fund.

He said the bank has not yet put the loans on the market and therefore it was "speculation to suggest the buyer may be a so-called vulture fund".

But the Irish Independent understands Dilosk and Pepper Ireland, controlled by the private equity giant KKR, are among a number of circling investors.

Fianna Fáil leader Micheál Martin has accused banks of "proposing to outsource their difficult or dirty work rather than doing it themselves".

The Irish Independent understands Fine Gael ministers discussed the PTSB situation at a pre-Cabinet meeting yesterday.

In an attempt to head off a potential rift with Fianna Fáil, the Government has agreed to work with the Opposition to pass new legislation.

A minister said: "It was the categorical view of the room that we have to be on the side of the borrowers and the Taoiseach made that clear afterwards at the full Cabinet meeting."

Later in the Dáil, the Taoiseach said: "The Government very much stands on the side of people and families who are making an honest attempt to settle their debts, to pay their mortgages, or to pay down their personal or business loans.

"It is very much the job of Government and of this Oireachtas to ensure people and businesses have the protections they need. If additional protections are required we are certainly open to considering them."

Part of the Government plan is to fast-track legislation brought forward last year by Independent Alliance Minister Kevin 'Boxer' Moran.

The Keeping People in their Homes Bill 2017 has been transposed into a proposed amending bill to the Land and Conveyancing Reform Act 2013.

But amid political uproar at the bank's decision to sell such a large volume of residential mortgages, PTSB finally broke its silence and will push ahead with the sale.

The bank emphasised the pressure imposed on it by "European authorities" to tackle its high stack of non-performing loans (NPLs), which stand at 28pc of its loan book - the highest among the Irish banks.

PTSB said it is "not alone amongst banks in the eurozone or in Ireland in having to deal with a significant NPL issue".

But its approach is a sharp change in strategy and has set off a political earthquake.

In a statement it provided details of the loans selected for sale, revealing that of the €2.7bn impaired home loans on the block, "just under €2bn is accounted for by PDH loans".

It said these mortgages are "typically owned by customers who have not engaged with the bank, whose mortgages are unsustainable or who have been unable to meet the terms of various treatments put in place.

"Of this portion of Project Glas, some account holders have not engaged with the bank for over seven years and on average the loans are over 3.5 years in arrears."

It stressed "many have made no payments at all for years".

However, the bank highlighted some of the loans are subject to "forbearance measures".

In other words, the bank has restructured or cleaned up the loans - but under the EU rules remains unable to shift these debts into its performing or core book.

Irish Independent

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