Dáil Éireann Debate, Thursday - 3 July 2014
24. Deputy Michael McGrath asked the Minister for Finance if his approval was sought by Permanent TSB for the disposal of its sub-prime mortgage division; if the sale is likely to take place prior to enactment of legislation on the protection of mortgage holders whose loans are sold to unregulated third parties; and if he will make a statement on the matter. [28541/14]
Amharc ar fhreagraI am advised by Permanent TSB that in March 2011 Springboard Mortgages was identified as non-core and its sale was required as part of the Central Bank Prudential Liquidity Assessment Review ("PLAR"). A sale process was undertaken in 2011 but a sale did not complete for commercial reasons at that time.
Springboard Mortgages, which has circa 2,200 mortgages, has remained a non-core portfolio of Permanent TSB since 2011. As recently as the release of the 2013 annual results, in March 2014, Permanent TSB stated publically that Springboard Mortgages was being prepared for sale.
I have been informed by Permanent TSB that a financial adviser was appointed in June 2014 to assist in the sale of the portfolio. Permanent TSB will now enter the preparation stage of this project and the timeline for completion will be established as part of this phase.
It should also be noted that the sale of its non-core entities is an integral part of the Permanent TSB's Capital and Liquidity Plan.
Under Clause 11 of the Relationship Framework, PTSB would be obliged to consult with me if they were proposing a disposal of a loan/loans for an amount in excess of €50 million. In the Relationship Framework it is recognised that PTSB remains a separate economic unit with independent powers of decision and that its Board and management team retain responsibility and authority for determining Permanent TSB's strategy and commercial policies and conducting its day-to-day operations. The consultation would carefully assess, at any point in time, the matter based on the facts and in particular the impact on Permanent TSB's profit, capital and funding.
The Department of Finance is currently preparing the Sale of Loan Books to Unregulated Third Parties Bill. This will address concerns surrounding the continued applicability of the Code of Conduct on Mortgage Arrears after the sale of loan books to unregulated entities. Detailed engagement with the Attorney General's office and the Central Bank on draft legislation has now commenced. I have always made it clear that this is a complex issue. The Bill is listed for publication in 2015 however, it is intended that the legislation will be commenced as soon as possible.
The Government has always been clear that we would ensure mortgage holders maintained the protection of the CCMA. The two unregulated purchasers to date of residential mortgage loans from IBRC, Loan Star and Oaktree, have both voluntarily committed to servicing these books in accordance with the terms of the CCMA. The Irish company which is buying ICS mortgages has said that it will apply the relevant codes of conduct and that it has applied to the Central Bank of Ireland for authorisation.
Permanent TSB have committed to ensuring that any sale prior to enactment of this legislation, will be to a purchaser that voluntarily signs up to CCMA.
