Permanent TSB rates ‘not a ripoff’

The chief executive of Permanent TSB has told an Oireachtas committee reviewing the conduct of the banks that PTSB is not ripping off its customers by charging too much for its standard variable mortgage rates.

Jeremy Masding said PTSB set its home loan rates to reflect the higher funding and other costs prevalent in Ireland — including dealing with the legacy of loan arrears — that make banking here much more expensive than other countries.

“We are impacted by the high volume of mortgage defaults we have in Ireland. It is an unfortunate fact that people who do pay their mortgages here, do have to pay a bit extra to make up for the historically high number of people who can’t or won’t,” he told the Finance and Public Sector and Reform Committee.

Mr Masding was the latest bank chief to mount a defence of the banking industry and its treatment of hard-pressed mortgage holders. He said PTSB was unlikely any time soon to make large cuts to variable rates for existing customers, saying the bank offers mortgages below its existing 4.5% rate as long as the risk profile of new customers allows.

Quizzed on his dealings with the Government and Central Bank, he said that Minister for Finance Michael Noonan would never ask PTSB to cut mortgage rates. If he were asked, Mr Masding said he would refuse because the bank has an independent commercial relationship with the Government.

Following the ECB stress tests, PTSB had strengthened its capital base, repaid the Department of Finance a €400m debt note, and the Government had retained a 75% stake after selling a quarter of the bank to stockmarket investors under the fundraising the bank had completed last month.

Mr Masding said there was no silver bullet available to solve Ireland’s large number of mortgage arrears and that international experience suggested only patient working through the cases would work.

“In terms of the journey that PTSB is on as we try to rebuild our business and return as much money as possible to the Irish taxpayer, these are very significant developments and we are delighted that they have been so successful,” he said.

Mr Noonan and the Central Bank of Ireland have faced considerable political scrutiny over the plight of households struggling to pay high standard variable-rate mortgages to banks that were rescued at huge cost during the banking crisis.

Opposition politicians and debt advocates have claimed that banks here are generating excessive profits by charging variable mortgage rates of up to 4.5% that are up to 2% above comparable home loan rates in the rest of the eurozone.

He said PTSB would not consider selling its tracker mortgage book.


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