Friday 20 July 2018

Finance Minister given a 'matter of days' to back vultures legislation

Paschal Donohoe TD Photo: Gareth Chaney/Collins
Paschal Donohoe TD Photo: Gareth Chaney/Collins
Kevin Doyle

Kevin Doyle

Fianna Fáil has given Finance Minister Paschal Donohoe a "matter of days" to back regulation of vulture funds ahead of the sale of 14,000 home loans by Permanent TSB.

The 'confidence and supply' arrangement which underpins the Government was invoked yesterday as Mr Donohoe held face-to-face talks with Fianna Fáil's finance spokesman Michael McGrath to discuss new legislation.

The Irish Independent understands Mr Donohoe did not give any firm commitment to adopt laws being proposed by the Opposition.

However, he promised to discuss the PTSB situation with the Central Bank, and to ask his policy advisers to review legislation.

Vulture funds are poised to buy up 14,000 home loans from the State-owned bank with combined debts of €2bn. This is on top of thousands of buy-to-let and farm loans.

Such funds are largely outside of the reach of the Central Bank and not subject to the same rules as domestic lenders, sparking fears about how they will deal with householders.

Taoiseach Leo Varadkar has insisted the Government cannot intervene directly to stop the sale but will consider moves to ensure such funds are regulated.

Read More: Richard Curran: PTSB's €4bn loan sale is a hard but necessary pill to swallow

Government sources described the meeting between Mr Donohoe and his Fianna Fáil counterpart as "constructive".

The Department of Finance believes there is no likelihood of the sale taking place before May at the earliest, meaning there is time to legislate if Fine Gael and Fianna Fáil can reach an agreement.

"That will still be quick legislation. If this is to be law in time, it needs serious Government backing and work from the civil service," a source said.

After the meeting, Mr McGrath told the Irish Independent he used the opportunity to explain why his party believes there is no option but to regulate vulture funds.

"The minister was in listening mode.

"He agreed to consider the bill and take advice from officials and the Central Bank.

"We're happy to give them a few days to come back - but we will be pressing ahead with legislation in the Dáil next week," he said.

The controversy has led to fears of a public backlash within Fine Gael. A private party meeting heard claims from TDs last night that Fianna Fáil is making "political capital" off the back of the sale.

But Mr Donohoe sought to reassure colleagues that the issue will be dealt with adequately and Fine Gael will be seen to be on "the side of the borrower".

Earlier, Mr Donohoe said he has to balance the need for PTSB to remain a viable entity with the desire to protect consumers.

"I need to ensure that Permanent TSB has a secure future in Irish banking, which I believe it does," he said.

"In order to do that, it needs - at the request of the regulator - to address issues that are there, and what I will aim to do is build on the legal and regulatory environment that we have to make sure that everybody is treated as fairly as possible.

"I will do that work across the coming weeks and months."

He said no legal rights currently afforded to mortgage holders will be affected by the sale.

"The current legal rights of any home owner will be maintained," he said.

"The decision of the bank to go ahead with a loan sale is the requirement that has been imposed on them by an independent regulator and Central Bank.

"We have gone through a long journey in our country of not believing that regulation is strong enough, of not believing it is being implemented well.

"The regulator of this bank has looked at the level of non- performing loans and indicated that it needs to come down."

Despite the political uproar, PTSB has insisted it plans to steam ahead with the sale as a result of pressure being imposed by "European authorities" to tackle its non-performing loans.

Some 28pc of PTSB's loan book is non-performing, the highest of any Irish bank.

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

It said some account holders have not engaged with the bank for seven years.

Irish Independent

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