Ulster Bank has strongly defended its decision to sell €300m worth of 900 distressed home loans in the Republic, saying the move will eventually strengthen the bank to boost lending.
However, the decision has come under fire from Fianna Fáil finance spokesperson Michael McGrath, who said new legislation is needed to oblige lenders to secure Central Bank approval.
He wants the Central Bank “urgently” to freeze the sale until the Dáil has a chance to review it.
Mr McGrath achieved considerable success in another area of mortgages when a Fianna Fáil bill that plans to empower the Central Bank to intervene in the market last week won the support of the Dáil.
The bill now goes to committee stage.
“The Dáil should be afforded the opportunity to legislate to protect customers from the sale of their loans to vulture funds. This was promised in the agreement between Fianna Fáil and Fine Gael,” Mr McGrath said yesterday.
The Ulster Bank mortgages are part of a larger portfolio of loans worth €2.5bn. The portfolio, known as ‘Project Oyster’, also includes business loans and buy-to-let loans.
Some €2.1bn of the ‘Oyster’ loans are in the Republic, and €350m are business loans in the North. Ulster Bank, which launched the sale by opening its ‘data room’ to potential bidders yesterday, is being advised by PwC.
It is believed to be the first time that a mainstream lender has sold a large bundle of residential loans.
The decision would strengthen the bank, Ulster Bank said. That stance won the support of Ross Maguire of New Beginning.
Mr Maguire said the new buyers would acquire the loans at a discount and would be more likely to strike deals with borrowers.
© Irish Examiner Ltd. All rights reserved