PTSB chief faces questions on high variable rate

SENIOR MANAGEMENT at Permanent TSB will face questions from the Oireachtas finance committee today on how the bank’s high standard variable rate has affected the rate of arrears on mortgages.

The lender is the first of the Irish banks to be questioned by the committee over the coming months on mortgage rates and how they are helping customers who have fallen into arrears.

Permanent TSB chief executive Jeremy Masding, who took over the role in February, has been asked in advance by Labour TD committee members Kevin Humphreys and Arthur Spring to outline the relationship between the mortgage rates and arrears.

The TDs have submitted questions seeking details of the extent to which standard variable rate mortgages are subsidising loss-making tracker loans and whether the bank will have to make further provisions to cover bad debts.

The bank, which is 99.2 per cent owned by the State, plans to update the committee on its two recent meetings with the troika, its separation from Irish Life and the effect on the mortgage book of the 0.85 percentage point reduction in the standard variable rate since May. The bank’s standard variable rate for existing customers has fallen to 4.34 per cent, but it is still at the higher end of the market.

The lender is being split into a good bank of €14.2 billion in loans and a bad bank, or asset management unit, with €12.5 billion in loans to be run down or sold.