We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.


Even PTSB customers who are meeting revised loan terms will have mortgages sold to vulture funds

Executives blamed the European regulator for the classification of these loans as non-performing.

PERMANENT TSB EXECUTIVES confirmed today that the mortgages of thousands of customers are included in a massive loan sale, despite the fact that they have been meeting the terms of their agreement.

The bank’s plan, entitled Project Glas, involves the sale of a €3.7 billion portfolio of non-performing loans, including mortgages on 14,000 private dwelling homes.

Appearing before the Oireachtas Finance Committee this morning, Chief Executive Officer Jeremy Masding said 4,300 of these loans are split mortgage agreements on primary dwelling homes.

Customers who are in financial difficulty can enter into a deal with their bank to split their mortgage and warehouse a percentage of it for a period of time, making their monthly payments more manageable.

Executives told the committee today that under European regulations, these loans are classed as non-performing and this is why they are included in the planned sale, despite the fact that these customers are meeting the terms of their agreement.

Masding said there is pressure from the regulator to bring down the bank’s ratio of non-performing loans, which last year was 26%. The European target is 5%.

“Given the State owns 75% of Permanent TSB, it is very much in the State’s interest that the bank manages its NPLs (non-performing loans) down to a tolerable level,” he said.

It is simply not possible to meet the regulator’s target and timescale within the capital envelope, without a loan sale.


Committee members expressed concern about the sales of these loans, as Fianna Fáil’s Michael McGrath pointed out that the split mortgage contracts contain clauses that allow the bank to terminate them “at will”.

“A vulture fund is far more likely to terminate a split mortgage than your bank is because they do not have a longterm investment horizon,” he said.

Senator Kieran O’Donnell said these customers “went through a painstaking process” in order to get the deal after they went into arrears.

“I just can’t express the torment it causes people in terms of probably getting to the point where they got a split mortgage [then to be included in a loan book sale],” he told executives.


Sinn Féin’s Pearse Doherty asked Masding if he was aware that the majority of this country’s parliament opposes the proposed sale of Irish citizens’ loans. Masding replied that his job as CEO is “to implement the right option for all Irish taxpayers” and in order to do that, the bank has to manage down the number of non-performing loans on its books.

Doherty also challenged them on the classification of these loans as non-performing, as he pointed out that AIB also has split mortgages, but has worked out a way for them to move into the performing category.

“It must be frustrating for the customers who unfortunately went to your bank instead of AIB,” he said.

“We might ask them to send you a wee note on the issue.”

The committee heard that the bank has been in regular contact with regulator in Europe in order to find a way to designate these loans as performing but has not yet received clarity.

‘Crystal clear’

AIB, meanwhile, has told the committee that it has managed to make it’s own treatment of split mortgages “crystal clear” with the European regulator.

Head of financial solutions Jim O’Keeffe said customers with split categories can be classes as performing once they have met the terms during a probationary period of one year. He said he could not comment on why Permanent TSB cannot arrange a similar system for its customers.

Despite the fact that non-performing loans represent 16% of the bank’s balance sheet (and remember the EU target is 5%), AIB does not plan to include any primary dwelling homes in portfolio sales.

“With regard to family homes a key development has been the launch of the enhanced mortgage-to-rent with our partners iCare,” he said.


“This was the result of a significant project over more than 12 months to put in place a potential alternative to a large-scale PDH portfolio sale with the advancement of this solution we were able to announce at our financial results for 2017, a few weeks ago, that our plans to achieve normalised NPL levels does not include the sale of PDH portfolios.”

There was criticism from committee members of O’Keeffe’s refusal to provide details of portfolio sales it is planning.

Doherty asked about Project Redwood, which has been mentioned in media reports in recent months. O’Keeffe declined to even confirm this project exists.

“That’s a remarkable attitude for you to adopt,” McGrath told him.

O’Keeffe confirmed that future portfolio sales could still include loans on buy-to-let properties with tenants in them, farms and retailers.

Read: PTSB chief refuses to appear before Finance Committee next week over loan sale>

Read: This vulture-fund backed homebuilder has spent over €100m on land for new houses>

Your Voice
Readers Comments
This is YOUR comments community. Stay civil, stay constructive, stay on topic. Please familiarise yourself with our comments policy here before taking part.
Leave a Comment
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.

    Leave a commentcancel