PTSB confirms sale of subprime mortgages

Permanent TSB has confirmed the sale of its Springboard subprime mortgage book of about 2,200 mortgages to Mars Capital Ireland for an undisclosed sum.

Springboard has a loan book with a face value of approximately €468 million. About €350 million of the loans are non-performing. The business stopped offering loans in 2013 and is in wind-down.

While it is not clear how much has been paid for the book, Permanent TSB, which is 99.2 per cent owned by the State, said the impact on the group’s profit and loss account and Core Equity Tier 1 Capital Ratio would be positive.

It said proceeds from the sale will be used to further reduce the group’s funding requirements in line with the ongoing restructuring of its balance sheet.

In their audited accounts for the year ended December 31st 2013, Springboard reported a profit of €3.2million.

Market sources indicated that PTSB might have achieved 60 cent or more in the euro for the mortgages sold to Mars. This would suggest that PTSB achieved a price of about €280 million for the book, which is one of a number of non-core assets that the bank has decided to offload.

"This transaction completes an important part of our planned deleveraging programme and, importantly, it also confirms the adequacy of our provisioning methodology. Non-conforming lending does have a limited role to play in a mature mortgage market, but it was not appropriate for us as at this time as we focus on our rebuilding task," said chief executive Jeremy Masding.

Earlier this year Mars, a British business that specialises in mortgage servicing, acquired residential mortgages from Irish Bank Resolution Corporation in a transaction backed by funds managed by Oaktree Capital in the US.

It is not clear if Oaktree is involved in this deal.

Springboard was originally a joint venture between Irish Life & Permanent (a predecessor of PTSB) and US bank Merrill Lynch that was established in 2007 to sell mortgages to what it called "near-prime" customers - or those with poor credit histories.