One of the country’s leading banks has said they have no option but to sell of distressed mortgages to vulture funds.
In announcment made on Thursday Permanent TSB said they cannot meet the European Central Bank’s guidelines to reduce non performing loans without selling on mortgages.
The bank which has a back catalogue of €3.7bn in non preforming mortgages, told an Oireachtas Finance Committee on Thursday that they have no option but to sell on pre-existing loans so they can actively reduce its quota of non profit mortgages in order to meet the ECB’s requirements within the timescale given.
PTSB say although the move has not been made mandatory by the financial regulator, they do argue that future sales of distressed mortgages would be in the best interests of the state given that it has a 75% stake within the bank.
The news which could be potentially damaging to thousands of PTSB customers comes after the financial regulator ordered the bank to address its ratio in regards to non-performing loans.
Although PTSB say they have extensively reviewed the situation in an effort to avoid major casualties, they say the prospect of selling on the bad debt is inevitable given that they must make a significant step when it comes to reducing its current ratio from 26% to the ECB’s acceptable target of 5% for non-performing loans.
The potential sale of the bad debt could very well leave thousands of PTSB mortgage holders in a difficult and unpleasant position as the sales could lead to their current agreements being immediately terminated even though they are currently meeting the required payments.