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Wednesday 15 August 2018

Banks ready to sell 42,000 more distressed mortgages after €1.3bn vulture fund deal by Permanent TSB

Francesca McDonagh
Francesca McDonagh
Donal O'Donovan

Donal O'Donovan

As MANY as 42,000 distressed mortgages are actively or tentatively for sale by Irish banks, Independent.ie has established.

It comes following the week's €1.3bn deal by Permanent TSB to sell customer home loans to a vulture fund.

Ulster Bank is already in the market with an auction of 6,500 Irish mortgages, with combined debts of €1.6bn.

The sale, launched in May, is split between 2,900 buy-to-let investor loans and 3,600 primary dwelling homes - standard owner-occupier mortgages.

The owner-occupier mortgages are in deep arrears with an average of 44 months.

Almost three-quarters of the borrowers first entered arrears between seven and nine years ago. A sale is expected later this year.

Bank of Ireland chief executive Francesca McDonagh said on Monday her bank is for the first time considering a sale of some or all of its €2.5bn of bad mortgages, after coming under increased pressure from European regulators.

About 60pc of the 14,128 problem mortgages involved are owner occupier loans.

KBC Bank Ireland has the highest share of bad loans of any Irish lender.

Like Bank of Ireland it has avoided loans sales up to now, but is under increased pressure due to the hardening stance from regulators.

The bank declined to comment on its plans yesterday, because it is in a "closed period" where it cannot communicate with the market before financial results due next week.

Last month, however, the head of its Irish arm Wim Verbraeken told the Oireachtas Finance Committee the Belgian-owned lender is assessing "all options" to reduce the non-performing exposures.

The most recent figures from KBC Ireland show around €2bn of its owner-occupied mortgages were classed as non-performing, along with €1.5bn of buy-to let loans.

AIB has the biggest stock of non-performing mortgages of any Irish bank.

Its latest results last week showed it is sitting on €4.16bn of problem mortgages. State-controlled AIB sold off more than €1bn of bad commercial loans in recent weeks.

However, the bank is understood to have stripped out mortgages tied to residential homes before launching that sale, and ruled out sales of home loans back in March - in the midst of a controversy around the PTSB sale.

Taoiseach Leo Varadkar has been urged to recall the Dáil to deal with the fall-out of the revelation that PTSB has sold €1.3bn of its mortgage book to a vulture fund.

PTSB, 75pc owned by the State, struck the deal with Start Mortgages, an affiliate of US-based Lone Star for the portfolio of 10,700 home loans - 7,400 owner occupied and 3,300 buy-to-let properties.

John McGuinness, chairman of the Oireachtas Finance Committee, tweeted: "The Dáil should be recalled to stop the PTSB sale of family homes to vulture funds and to debate the Affordable Housing and Fair Mortgage Bill 2018."

"We need to be fair to the people affected," Finance Minister Paschal Donohoe said on 'Morning Ireland' yesterday.

He said he was confident holders of non-performing mortgages from PTSB, sold to a vulture fund, will continue to have Central Bank protection.

Mr Donohoe said that 25pc of mortgages at the bank were in arrears for more than three-and-a-half years and that was a real issue for it.

Irish Independent

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