Dáil Éireann Debate, Tuesday - 27 March 2018
114. Deputy Paul Murphy asked the Minister for Finance the contacts he has had with senior management of the main banks in relation to the potential sale of loan books to vulture funds; and if he will make a statement on the matter. [13662/18]
Amharc ar fhreagra116. Deputy Jonathan O'Brien asked the Minister for Finance the meetings he has held with the State owned banks at which the issue of the sale of loans to vulture funds was raised; and if he will make a statement on the matter. [13938/18]
Amharc ar fhreagra194. Deputy Richard Boyd Barrett asked the Minister for Finance the reason he continues to allow banks, particularly those in which the Government has an ownership stake, to sell mortgage loans to vulture funds; his plans to implement policy changes to address this issue; and if he will make a statement on the matter. [13630/18]
Amharc ar fhreagraI propose to take Questions Nos. 114, 116 and 194 together.
As part of their regular engagement with the banks in which the State has a shareholding, officials in my Department discuss a wide range of topics, including loan sales. For example, in the case of Project Glas, the recently announced project announced by PTSB to sell a portfolio of NPLs, officials were first briefed by the bank on the timing of the sale, and potential composition of the portfolio, in the week commencing 15th January. Officials in turn, briefed me on the matter on 19th January.
As this information was commercially sensitive, and as I am obliged to comply with stock exchange disclosure and market abuse rules, I was not in a position to discuss it publicly at the time.
In addition to the regular engagement Department officials have with the banks, I myself have met recently with senior officials of some of the Irish retail domestic banks and intend holding similar meetings with the remaining banks in due course. At these meetings, loan sales were discussed, where relevant. The Deputy will be aware in this regard, that it is not appropriate for me to put any more facts into the public domain, over and above what the banks themselves have disclosed, as I must respect commercial confidentiality and stock exchange disclosure rules.
It is worth noting that, in the case of PTSB, no loan has been sold yet and it won’t be known how many loans will be sold for a number of months, nor the composition of these loans. In addition, it is not known to whom the loans will be sold. However, I want and expect PTSB to be transparent with their customers when it comes to this sale process as it evolves.
It is important to highlight that there are no changes to the rights or obligations of a customer whose loan is sold by a bank. All terms and conditions attached to their mortgage contract remain in place. In addition, as credit servicing firms servicing loans on behalf of unregulated entities are required to comply with the Code of Conduct on Mortgage Arrears (CCMA), all protections under the CCMA are unchanged. The customer is in the exact same position as they were before their loan was sold. In relation specifically to restructured loans, including splits, any purchaser will be obliged to honour the terms of the restructure agreement, should such loans be included in the final sale.
Notwithstanding the protections currently in place, I have made it clear that I am prepared to engage with Deputies from other parties in an effort to see if we can strengthen and enhance the protections, in a sensible manner, that are already in place for mortgage holders. I would highlight in this regard the Bill that has been introduced by Deputy Michael McGrath which seeks to regulate credit agreement owners of mortgage loans and which has received Government support.
For clarity, I should highlight for the Deputy that 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 were insisted upon by the European Commission to protect competition in the Irish market. Loan sales do not require my consent, though the banks are required to formally consult with me. In the case of the PTSB loan sale, the bank has not yet consulted with me but will do so in due course.
