Thursday 13 December 2018

Buyer of PTSB loans to remain secret - and will avoid tax on profit

Jeremy Masding
Jeremy Masding
Donal O'Donovan

Donal O'Donovan

The secretive buyers of €1.3bn of mortgages from Permanent TSB will pay no tax on their profits, the chief of the State-owned bank admitted.

The heads of Permanent TSB, which is selling the homeloans, and Pepper Ireland, which will take over their day-to-day management, told the Oireachtas Finance Committee that they were barred from naming the ultimate beneficial owner of Glenbeigh, the financial vehicle that will be the true beneficial owner when the loans are sold.

That's because both had signed non-disclosure agreements, they said.

Executives refused to confirm whether US bond investor Pimco is the main investor.

Permanent TSB chief executive Jeremy Masding also admitted the structure to facilitate the controversial sale will be tax free - using a so-called Section 110 company.

Use of Section 110 companies by so-called vulture funds had led to the rules being tightened in 2016, but Permanent TSB's retention of a 5pc interest means the Glenbeigh structure will be tax exempt.

The bank is obliged to retain that stake, Mr Masding told the committee.

Permanent TSB's sale is particularly controversial because many of the 6,272 borrowers affected had engaged with the bank after falling into arrears and agreed restructuring deals.

It includes thousands of so-called split mortgages - where the borrower and bank agreed that part of the debt would be parked for a period.

Almost all of the debt is secured on the borrowers' primary homes.

Under intense questioning from TDs and senators - including Fianna Fáil's Michael McGrath, Sinn Féin's Pearse Doherty and Fine Gael's Kieran O'Donnell - executives explained the anonymous and tax-free structure of the new ownership.

Finance Minister Paschal Donohoe was informed of the planned sale, and consented in writing at the end of November, Mr Masding said.

Pepper and Permanent TSB both said the terms of any restructuring agreed between customers and Permanent TSB will be unchanged after the deal.

Once the sale goes through, responsibility for day-to-day decisions about the mortgages, including interest rate setting and any potential new restructuring, will be taken by Pepper as master servicer, Pepper Ireland chief executive Cormac Ryan said.

Pepper, which is regulated by the Central Bank here, will have legal responsibility for those decisions, he said.

However, he said Pepper and representatives of the unnamed Glenbeigh backer will hold monthly meetings to consult on the performance of the portfolio.

Irish Independent

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