EY to advise PTSB on strategy for selling bad loans
Bank under pressure to deal decisively with its €2.68bn of worst-performing mortgages
Jeremy Masding, group chief executive of Permanent TSB: the bank has the highest ratio of non-performing loans (NPLs) among Ireland’s bailed-out banks, at 28 per cent of its portfolio. Photograph: Colm Mahady/Fennells
Permanent TSB has selected accountancy and consultancy firm EY in Dublin to advise on loan sales as the lender prepares to move decisively on its €2.68 billion of worst-performing mortgages.
The 75 per cent State-owned bank, led by chief executive Jeremy Masding, began its search for advisers on the matter early last month when it wrote to a number of investment banks and accountancy firms.
Sources said that EY will help the bank draw up a strategy for loan sales and managing transactions, which may begin as soon as this year. Spokesmen for PTSB and EY declined to comment on Friday.
PTSB has the highest ratio of non-performing loans (NPLs) among Ireland’s bailed-out banks, at 28 per cent of its portfolio at the end of June, even as the group and wider industry have cut arrears at pace from their 2013 peak. The European Central Bank, in charge of supervising euro zone lenders for almost three years, is piling pressure on lenders with high levels of NPLs to come up with credible strategies to reduce them over time.
UK mortgage portfolio
PTSB’s problem has been compounded by the fact that it was forced to sell its largely performing UK mortgage portfolio in the past two years under a European Union restructuring programme tied to its €2.7 billion bailout in 2011.
More than half of PTSB’s €5.78 billion of non-performing loans are in some form of long-term restructuring or forbearance arrangement and are making an important contribution to the group’s profits.
The bank’s €2.68 million of “untreated” bad loans – either because the bank can’t find a sustainable solution or the borrowers haven’t engaged – are likely to be the focus of the disposal plan.
Shares in PTSB have fallen by 39 per cent so far this year, making it the worst-performing stock on the Iseq 20 index in Dublin, amid concerns that the bank will have to sell non-performing loans at deep discounts. This has dented expectations among analysts that the bank may have excess capital to return to shareholders, led by the Government, in the coming years.