Dáil Éireann Debate, Friday - 7 September 2018
125. Deputy Seán Haughey asked the Minister for Finance his views on the recent sale by banks (details supplied) and other financial institutions of performing and non-performing loans to vulture funds; if these sales will be prevented; the advice offered to affected mortgage holders who are concerned about same; and if he will make a statement on the matter. [36049/18]
View answerThe Deputy may be aware that in my role as Minister for Finance, I cannot stop loan sales even by the banks in which the State has a shareholding. These decisions are the responsibility of the board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks which are legally binding documents that I cannot change unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
Despite the significant progress already made by the Irish banks in reducing NPLs, their ratios are still well above the European average of around 4%. PTSB is a particular outlier in this regard with a ratio of 25%, before the recently announced loan sale – Project Glas. Given this position, banking regulators have tasked each bank with developing and implementing strategies with the expectation that their ratios will be reduced towards the European average. Given the scale of reduction required, Project Glas was a necessary action taken by PTSB.
In relation to the position following a loan sale, I have commented on a number of occasions that the protections for borrowers are unchanged. All terms and conditions attached to their mortgage contract remain in place. In addition, Start Mortgages the purchaser of the PTSB loan book, is a retail credit firm regulated by the Central Bank of Ireland. When dealing with borrowers, retail credit firms are bound by the same regulations that currently apply to PTSB. Like PTSB, they are required to comply with the Consumer Protection Code (CPC) and the Code of Conduct for Mortgage Arrears (CCMA) when dealing with borrowers who are in arrears.
I should also highlight that regardless of the protections that are currently in place for mortgage holders, I have confirmed that I am prepared to engage with Deputies from other parties in an effort to see if these protections can be strengthened further in a sensible manner.
This commitment has been demonstrated recently by the Government’s support for the Bill introduced by Deputy Michael McGrath, T.D., which seeks to regulate the purchasers of mortgage loans. In addition, earlier this year I asked the Central Bank to carry out a review of the CCMA to ensure it remains as effective as possible. I have asked for the report to be completed as soon as is practicable. The Central Bank has stated that it is their intention to deliver the report by the end of September 2018. If as a result of this review, the CCMA requires amendment, a full public consultation process would be required in line with normal guidelines.
