PERMANENT TSB HAS insisted that it will fully apply the new law on personal insolvency next year amid criticism of its public interest director after his appearance in front of an Oireachtas committee yesterday.
Justice Minister Alan Shatter strongly criticised the former tánaiste and the current Permanent TSB public interest director Ray MacSharry this morning, saying he is “seriously out of touch” with the way in which banks are expected to deal with new personal insolvency legislation.
The legislation has passed all stages in the Dáil and Seanad and is expected to be signed into law by the President in the coming days.
Permanent TSB (PTSB) said today that it “is committed – fully and irrevocably - to applying the terms of the Personal Insolvency Act in relevant situations when it comes into law”.
Shatter was speaking in the aftermath of MacSharry’s comments at the Oireachtas Finance Committee yesterday where he said that there would be no debt forgiveness though PTSB would do its “utmost” to ensure mortgage holders were able to retain their homes.
‘Bank would not be solvent’
The former tánaiste, finance minister and European Commissioner said that as a public interest director it was his main priority to ensure the bank is solvent and the taxpayer is protected.
He argued that if there was widespread debt forgiveness “then the bank would not be solvent”.
On RTÉ Radio this morning Shatter said it was “entirely inappropriate” for MacSharry to make the comments knowing that the personal insolvency legislation was passing through the Oireachtas yesterday.
“I was very disappointed in what Ray MacSharry said to the Joint Oireachtas Committee yesterday,” he told Today with Pat Kenny.
He went on to say that MacSharry should give “serious consideration to what he said” and said that all directors, including those appointed as public interest directors, “must have regard to the content and the intent of the legislation”.
“I do believe that he was seriously out of touch with the manner in which financial institutions have to deal with this matter,” Shatter said adding that “quite clearly financial institutions are going to have to engage with their customers”.
In response this afternoon, PTSB issued a statement saying that it has invested “very significant resources to enable it to work closely with customers in difficulties on their mortgages”.
It insisted: “Even now, the bank is agreeing reasonable, sustainable arrangements with customers in this regard.”
‘Throw away scarce capital’
PTSB said that many members of the Oireachtas Finance Committee had argued that the bank should engage in “unilateral write down or forgiveness of debt for any customer in arrears”.
“Some took that further and called for the bank to write down to the current value of the house, the loans of any customer in negative equity – whether their loan was performing or not,” the statement said.
“These are not realistic proposals and they ignore the fact that the taxpayer has put €4 billion into the bank and therefore has an enormous interest in ensuring that it returns to financial stability as soon as possible.
“Rather than throw away scarce capital to customer in arrears regardless of their actual circumstances or prospects, the bank’s focus is on working with customers on a case-by-case basis to find sustainable solutions for their particular situations.
“If, in due course, it becomes clear that it will not be economic over time to continue to pursue a shortfall in money owed, then the bank will consider writing off such debt for those customers.”
The bank went on to say that to engage with customers having committed to “an upfront debt write down” would be “counterproductive” and unfair to customers who had been paying off their debts.
The statement added: “It would also require the taxpayer to provide additional capital to the bank and that is in nobody’s interest.
“Every day of the week permanent tsb is working sympathetically and constructively with customers who are in arrears. It does no service to those people to hold out the promise of some miracle cure for their financial difficulties in the form of blanket debt write down or forgiveness.”
Tonight, Shatter welcomed PTSB’s statement saying that it was right that the bank pointed out that the financial circumstances of each person who seeks to enter a personal insolvency arrangement will have to be considered individually.
“It is of crucial importance that each of our financial institutions constructively engages in the debt resolution processes that will be available under the Act in the New Year,” he said.