Fianna Fáil Spokesperson on Finance Michael McGrath TD has said customers whose loans are being sold by Permanent TSB through a securitisation structure must be protected and not fall victim to a change in strategy in the management of the loans.
Deputy McGrath commented, “We have known for some time that Permanent TSB has been considering a securitisation option to further reduce its elevated level of non-performing loans (NPLs). The transaction announced today is undoubtedly better than an outright sale to a so called ‘vulture fund’ but important questions need to be answered as to how exactly this will work for the affected borrowers.
“It is my understanding that Pepper – a regulated Retail Credit Firm – will become the legal owner of the portfolio and will make all decisions concerning individual loans. I will be seeking an assurance that the investor benefitting from the securitisation income stream will have no role whatsoever in the management of the loan portfolio. This is important because we cannot have a situation where an investor at arm’s length from the borrower is determining the overall strategy.
“There are certainly benefits to Permanent TSB from this transaction. The bank will reduce its NPL ratio to below 10% in a move that will please European and domestic regulators. However, it must be highlighted that – while these loans are technically classified as NPLs – the borrowers affected by today’s announcement have cooperated fully with the bank, have a restructure agreement in place and are honouring the terms of the agreement.
“I welcome the willingness of Pepper to come before the Oireachtas Finance Committee to explain how this portfolio will be managed. At this meeting, I will be asking them to outline the suite of mortgage restructure solutions they offer to borrowers in difficulty and to provide details of how their relationship with the securitisation vehicle will work. Pepper will need to outline how they will approach the review of mortgage restructure arrangements on their expiry.
“As banks repair their balance sheets, it is important there is a consumer dividend in the Irish mortgage market. As the capital position of banks improves, there will be even less excuse for them to be charging the highest mortgage rates in the Eurozone. There simply has to be progress on this issue.
“From a Fianna Fáil perspective, our priority is to ensure that borrowers who are cooperating and making every effort to meet their obligations are treated fairly by their lender. I look forward to working through the specifics of this transaction with Permanent TSB and Pepper when they appear before the Oireachtas Finance Committee in the weeks ahead,” concluded McGrath.