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Permanent TSB’s split mortgage product may be the cause of their need to sell – Doherty

22 March, 2018 - by Pearse Doherty TD

Sinn Féin Finance Spokesperson Pearse Doherty has said that the real reason Permanent TSB are selling 14,000 family home loans to vultures may have become clearer today after the bank admitted to him that the regulatory treatment of their split mortgages is as the root of the bank’s bad debt issue.  This is in stark contrast to AIB whose split mortgages do not count as “non-performing” under ECB rules.

Deputy Doherty said this clarity means there are a number of options now on the table to reduce the bad loans issue.

Deputy Doherty said:

“Today, in response to my questioning, it has become clearer that at the root of Permanent TSB’s ‘need’ to sell loan books is the regulatory treatment of their split mortgage product. This opens the possibility that selling off these loans is not the only option. It may be the easiest option for the bank, but that doesn’t make it the right one.

“As revealed to Sinn Féin MEP Matt Carthy, the bank are engaging with the ECB on the issue of how their non-performing split mortgages are accounted for. The ECB also revealed to MEP Carthy yesterday the criteria that a split mortgage or other restructuring must need to be counted as performing.  It appears that Permanent TSB’s split mortgage product has particular issues in its legal structure that means the ECB view them as non-performing even if borrowers are meeting their obligations under the split mortgage.

“This is absolute contrast to what AIB told the Committee- that their split mortgage product is deemed as ‘performing’ under ECB rules.  It is the fault of Permanent TSB that their product falls foul of the regulator. Other banks don’t have this issue. Hard working families should not be sacrificed to vultures because of a mess created by Permanent TSB itself.

“One thing is clear after today. There are a number of issues that are complex regarding the non-performing loans at Permanent TSB and selling to vultures is not the only option by a long shot. It appears some of these problem loans are only problems because they are with PTSB and wouldn’t be non-performing at another bank.” 

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