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Vulture funds

Finance Minister says it's up to PTSB if it wants to appear before the finance committee over loan sale

Last month, PTSB sold its controversial Project Glas loan portfolio to an affiliate of the so-called vulture fund Lone Star for around €1.3 billion.

FINANCE MINISTER PASCHAL Donohoe said whether Permanent TSB officials appear before the Oireachtas Finance Committee “is a matter for them”. 

Sinn Féin’s finance spokesperson Pearse Doherty said PTSB bank bosses, as well as those impacted by this summer’s mortgage loan book sale, will be invited to appear before the committee. 

The minister told today that PTSB bankers have already appeared before the committee in the past and said “it is a matter for them” whether they want to go back into that committee or not. 

He added that he would encourage all banks to engage with the Oireachtas committee system.

Project Glas

Last month, PTSB sold its controversial Project Glas loan portfolio to an affiliate of the so-called vulture fund Lone Star for around €1.3 billion.

The portfolio contains 10,700 home loans, which the bank has dubbed as “non-performing loans”.

A total of 7,400 are owner-occupier mortgages, while 3,300 are buy-to-let properties.

The sale to Start Mortgages – Lone Star’s affiliate – has been criticised by the Irish Mortgage Holders Organisation, Fianna Fáil and Minister for Transport, Tourism and Sport Shane Ross.

Since the sale, a number of homeowners have spoken out about being shocked they were sold on. Many customers state they were engaging with PTSB, and were not in large-scale arrears. 

When asked if he was concerned about the numerous individual cases emerging of mortgage holders who maintain they were engaging with the bank and were not in large-scale arrears, some not being in arrears at all, the minister said:

“In relation to individual elements of the loan book sale I am not in a position to be able to comment on every individual customer that might be affected by it.”

He said PTSB has outlined to him that it will and has engaged with everybody affected by the sale. 

0416 Paschal Donohue_90553253 Minister for Finance and Public Expenditure and Reform, Paschal Donohoe. Sam Boal Sam Boal

Donohoe said the “very high level of non-performing loans within PTSB is a matter that has to be dealt with” or it will face “real challenges” in the future.

The finance minister said he is committed to ensuring that a “high level” of protections remain in place for the consumer, adding that he has had a lot of contact with Fianna Fáil’s finance spokesperson Michael McGrath to ensure the safe passage of his legislation which sets out to regulate vulture funds.

He said the review of the code of conduct for banks on mortgage arrears is close to completion, adding that it will be delivered to him “imminently”.

If the high level of non-performing loans is not dealt with, “we won’t be able to make progress in ensuring we have more attractive interest rates”, said the minister .

Managing risks

The Governor of the Central Bank Philip Lane said today that the sale of non-performing loans can help protect the financial system, telling RTÉ News at One that “there is a role for loan sales in terms of managing risks”.  Equally, the Central Bank said it must ensure that no matter who owns the loans, the same level of protections apply, he said.  

Earlier this summer, Transport Minister Shane Ross said in an interview with that he thought it was a cynical move by PTSB, which is 75% State owned, to make the sale when the Dáil was in recess.

He also said the relationship between a State-owned bank and the government needs to be looked at, adding that the government must have more of a say in large-scale loan book sales of this type.

A number of politicians have said their offices have been inundated with calls from people who are not in arrears, yet have found their bank has sold on their loans.

Fianna Fáil senator Lorraine Clifford Lee said she has taken calls from constituents who are not in arrears, never were in arrears, who do not have any linked mortgages in arrears, yet have had their mortgages sold on by PTSB to the vulture fund.

“They are absolutely baffled, there are people in that bundle and they should be taken out and the minister really needs to make comment on those people,” she said.

A recent statement on the loan sale from the Department of Finance states:

There are a number of supports available for those in mortgage arrears through various services/organisations, including the Abhaile Scheme and the Insolvency Service of Ireland (ISI). 
The government encourages those are experiencing mortgage difficulty to seek assistance by engaging with their creditors at the earliest stage possible. 

The statement goes on to say that the minister does not have a role to play in loan book sales, even in the case where the bank is 75% owned by the taxpayer.

“It should be noted that decisions in respect of loan book sales are the responsibility of the Board and management of PTSB. Under the terms of the Relationship Framework, which is a legally binding agreement between the Minister for Finance and PTSB, loan sales do not require the Minister’s consent.

“In fact, the Relationship Framework specifically prevents the Minister from interfering in actions that the bank must take to meet its regulatory requirements.”

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