Dáil Éireann Debate, Friday - 7 September 2018
126. Deputy Thomas P. Broughan asked the Minister for Finance the discussions taking place with partially State-owned banks regarding the sale of non-performing loans to vulture funds; the criteria being used to decide on the make up of the portfolios; and if he will make a statement on the matter. [36133/18]
View answer130. Deputy Thomas P. Broughan asked the Minister for Finance the level of interaction he has with the CEOs of the various partially State-owned banks and the non-performing loans of each; and if he will make a statement on the matter. [36137/18]
View answerI propose to take Questions Nos. 126 and 130 together.
In the first instance, I should highlight for the Deputy that in my role as Minister for Finance, I cannot stop loan sales even by the banks in which the State has a shareholding. Decisions in this regard, as well as the criteria used to decide the make-up of loans to be included, are the sole 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 sale of reduction required, it was inevitable though unfortunate, that Project Glas was a necessary action taken by PTSB.
Notwithstanding a loan sale, I wish to highlight that the protections for borrowers in place before the sale remain unchanged. In this regard, it is important to note that there are no changes to the rights of a borrower whose loan is sold by a bank. 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 since 2008. 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 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.
The interaction between both Department officials and myself and senior management of the banks in which the State has an investment takes place on a regular basis. As part of their ongoing engagement with the banks, Department officials meet with bank management during which a wide range of topics are discussed, including loan sales where relevant. Subsequent to these meetings, Department officials brief me as required. In addition to these meetings, I meet directly with the CEOs of each of the banks from time to time and loan sales would be included as an agenda item again where relevant.
