Impasse on loan sale to vulture funds

Struggling mortgage holders must be offered debt write-downs instead of so-called foreign vulture funds, Paschal Donohoe has been told.

Impasse on loan sale to vulture funds

“It is very difficult, very difficult to see how a solution can be found,” a senior Government source said.

The finance minister is facing a dilemma of trying to avoid a clash with Fianna Fáil, while also allowing PTSB reduce down the level of its non-performing loans.

Mr Donohoe faced almost an hour of questions from his party colleagues last night, but has yet to devise a solution which would allow the Government continue in office while also addressing the need of Permanent TSB to sell 18,000 non-performing loans, including 14,000 relating to private homes.

Mr Donohoe met with Fianna Fáil’s Michael McGrath yesterday to discuss Mr McGrath’s bill, which is seeking to regulate the vulture funds.

No solution was found at that meeting, however Fianna Fáil allowed Mr Donohoe time to deliberate over their bill before it comes back before the Dáil next week.

Fianna Fáil are pushing for a common standard of regulation as Mr McGrath said: “It is not acceptable to us that your local insurance broker, your local financial adviser is more regulated than a multibillion vulture fund in Ireland”.

At the Fine Gael meeting, TDs and senators mounted pressure on Mr Donohoe to intervene and see if borrowers can avail of write-downs on their loans rather than PTSB selling them off to unregulated funds.

Longford-Westmeath TD Peter Burke said there was a €9m local authority scheme nationwide where officials engaged with distressed borrowers. He asked why the banks did not do the same.

“We gave the banks over €30bn [in bailouts], why are they not engaged with borrowers? With the trajectory of economy now, are they just being lazy and selling these to vulture funds rather than engaging,” he told the Irish Examiner.

Senators Kieran O’Donnell, Michelle Mulherin, Paddy Burke all expressed concerns about the debacle. They, as well as TDs Kate O’Connell and Bernard Durkan, also warned of knock-on effects for business and farmers if banks now came looking to sell off their loans to unregulated funds.

Junior rural affairs minister Sean Kyne warned “this could be the start of things”, if farms and businesses were next on the list for loans to be sold off at discounted rates.

But Mr Donohoe warned that there were a significant amount of non-performing loans with PTSB, one of the highest in Europe.

Members emphasised that if there was a writedown, that it was borrowers who should benefit rather than unregulated funds.

Mr Donohoe will face robust questioning this morning at the Oireachtas Finance Committee.

But Sinn Féin’s Pearse Doherty said the row between Fine Gael and Fianna Fáil is a “phoney row” as it will do nothing to help protect the thousands of homeowners affected.

“These family homes will not be protected. The only solution is to sell these loans to another bank. This is a bank on life support, they are way behind on this compared to other banks. This is phoney debate.”

Mr Donohoe yesterday defended PTSB’s decision, claiming it would protect 2,000 jobs and over €17bn of deposits in the bank. He said the board of PTSB can and have moved to sell the portfolio.

“It’s very important across the coming period that the issue of non-performing loans in that bank be addressed, and the regulator — who is an independent regulator of any government — has indicated that level of non-performing loan has to come down.”

But he also acknowledged the “worry and concern” at the bank’s announcement .

The Department of Finance say they cannot interfere with commercial banks and how they sell their loans, despite the fact that PTSB is 75% state-owned.

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