State-owned Permanent TSB has agreed to sell mortgages owned by almost 2,000 borrowers to US fund Lone Star in the latest in a slew of so-called distressed loans sales.
The loans are likely to be sold at a fraction of the €506m owed. The portfolio was valued at €274m ahead of the sale. Lone Star owns Start Mortgages and is already one of the biggest owners of Irish defaulted mortgages.
Start Mortgages will take over servicing of the debt from Permanent TSB when the transaction completes. The portfolio consists of 1,932 borrower relationships comprising both 1,422 private dwelling homes (PDH) mortgages and 510 buy-to-lets.
As a result of the latest sale, Permanent TSB’s ratio of bad loans will fall from 10pc to around 7pc – approaching a target set by European regulators that has driven a dramatic surge in mortgage sales across the Irish banks over the past year.
All of the loans included in the sale are categorised as non-performing – meaning they have been in deep arrears. Permanent TSB said it is writing to all customers affected.
The bank’s CEO Jeremy Masding said customers will not lose existing protections because of the sale.
“It is important to note all customers will continue to be afforded existing regulatory protections after the transfer and that Start Mortgages is required to honour the terms and conditions of the Restructure Agreements or Alternative Repayment Arrangements in place for customers included in this sale,’’ he said.
PTSB was advised on the transaction by EY and Mason, Hayes & Curran.