IL&P on verge of availing of ‘bad bank’

Irish Life and Permanent is on the verge of availing of a “bad bank” in which it could transfer Permanent TSB’s loss-making home loans, it emerged last night.

The loans which are not in difficulty would be maintained in the existing business.

Sources told business news agency Bloomberg the EU and IMF was on the verge of agreeing to the move.

The troika would have to give its approval before the transition could be achieved.

Earlier this month, Permanent TSB reported a total after-tax loss of €424m for 2011, over €100m more than the €321m losses it generated in 2010. A quarter of its €25.4 billion Irish residential mortgage book was classified as either in arrears or impaired.

Bloomberg reported that Finance Minister Michael Noonan may announce an accord on the new set-up as soon as today as European and IMF officials complete their latest Irish aid programme review.

“The authorities will agree a way forward for PTSB by the end of April 2012,” the department said. “The 6th review of the programme will conclude tomorrow (today) and a press conference will be held and the changes agreed to the program will be outlined.”

Authorities want to strip out distressed and loss-making mortgages from Permanent TSB and Allied Irish Banks to clean up their balance sheets and ultimately help sell them.

Mike Aynsley, chief executive of Irish Bank Resolution Corporation, formerly Anglo Irish Bank, said last month he is in talks that may lead to the company taking on residential mortgages from other banks.

The State took control of Irish Life & Permanent after injecting €2.7bn into the company in July to help Permanent TSB meet regulatory capital requirements.

Irish Life spokesman Ray Gordon and Central Bank spokesman Peadar Hayes declined to comment on the discussions.