BY CLAY FISHER
Permanent TSB has sold a bundle of distressed mortgages to vulture fund Lone Star.
The portfolio has a gross balance sheet value of €2.1bn and the bank will receive cash consideration of €1.3bn.
PTSB said the deal will reduce the overall NPL ratio from 25% to 16% and increase the Common Equity Tier 1 Ratio by 200 basis points.
PTSB chief executive Jeremy Masding (pictured) said customers will continue to be afforded the protection of existing regulatory protections after the transfer.
“The bank will continue to reduce its NPL ratio to single digits in the near term,” Masding added. “Reducing the NPLs is a necessary step for us to take to complete the rebuilding of PTSB as a viable, competitive lender.”
In Association with
What’s Being Sold
- Non-performing loans linked to a total of 10,700 properties made up of 3,300 Buy-To-Let Properties and 7,400 Private Dwelling Houses. The residential mortgages are primarily made up of:
- 2,500 classified as accounts deemed 'Not Co-Operating'
- 3,850 classified as accounts which have refused treatments or where the account has failed to operate in line with the agreed ‘Treatment’
- Average arrears time of loans in the portfolio is 3.5 years
- Average arrears value of loans is €28,800
- Average value per loan is circa. €175,000
According to Masding, the bank has offered long term treatments to over 40,000 customers on a case-by-case basis based on individual circumstances and continues to engage with customers in default by various means including Mortgage-To-Rent schemes.
“PTSB will now begin contacting relevant customers to inform them that their loan is being transferred, and to confirm that existing legal and regulatory protections continue to remain in place,” he added.
Fianna Fáil finance spokesman Michael McGrath said Start Mortgages, the Lone Star subsidiary involved in the deal, should appear before the Oireachtas Finance Committee to outline how they will deal with customers in arrears.
Deputy McGrath commented:"Portfolio loan sales such as this are the easy way out for the banks as they strive to reduce their level of non-performing loans. It would be much better if Permanent TSB dealt with the loans itself and made case by case decisions involving restructuring the loans, writing off debt in some cases and only taking enforcement action as a last resort.
"While it is a positive at least that Start Mortgages is a regulated entity, there will be understandable concern among affected borrowers given its background as a sub-prime lender and the fact that it is owned by US vulture fund Lone Star. A key question is whether Start Mortgages will now offer a wide suite of restructuring solutions to borrowers in arrears.”
