Addressing high NPL ratios is one of the key priorities of the Single Supervisory Mechanism (SSM). PTSB’s latest published NPL ratio of 28% is one of the highest in the Eurozone. It is over five times the European average. Therefore, PTSB must deliver a significant reduction in its NPL ratio, and within a timeframe, that meets the expectations of the SSM.
Given the volume of borrowers who have refused to engage with the bank to date, and the number of cases where treatments have failed, achieving an acceptable NPL ratio will not be possible without loan sales.
It is important to highlight that the contractual terms of borrowers remain in place post a loan sale. In addition, all the protection enjoyed by borrowers under the CCMA is unaffected.
Under the terms of the Relationship Framework, which is a legally binding agreement between myself, as Minister for Finance and the bank, loan sales do not require my consent. However, the bank is required to consult with me when a loan sale reaches an advanced stage and is of a significant scale. Although I have been briefed on the matter, the formal consultation has not yet taken place but will do so in due course.
While loan sales are regrettable, I am also conscious of the need for the bank to continue on its path to recovery such that it can support our citizens through its deposit and lending activity. PTSB is a very important part of the Irish banking sector with over 1 million customers, €21bn of mortgage loans and €17bn of customer deposits. The bank also employs c. 2,500 staff.