PTSB set to slip into red due to sale of CHL mortgage book

Permanent TSB is likely to slip back into the red when it announces full year results next spring due to costs associated with the recent sale of its £2.3 billion CHL mortgage book in the UK, the bank's chief executive, Jeremy Masding, told the Oireachtas finance committee yesterday.

Mr Masding said PTSB, which is 75 per cent State owned, had achieved a significant milestone at its half-year results by posting an €80 million profit. This was its first group profit since 2007.

“That progress may be temporarily interrupted for the full year as we will have to take account of the losses arising from the recent sale of our remaining CHL loan book and the completion of the group’s deleveraging programme but the trajectory is clear and positive,” Mr Masding said.

Mr Masding once again apologised for the failure of the bank to apply the correct tracker mortgage rate to 1,372 customer accounts. This failure emerged in the middle of last year and has resulted in some €80 million in financial redress being paid to 1,200 of those affected customers.

Wrong interest rate

Sinn Féin's finance spokesman, Pearse Doherty, attacked PTSB's attitude towards this failure, accusing the bank of having "robbed" the customers by charging them the wrong interest rate on their mortgages.

Mr Masding said there was “no evidence” to suggest that a “conscious decision” had been taken by anyone at PTSB to “deprive people of a tracker rate”.

He said it was a “sad episode” for the bank, resulting from a “systems design failure” that pre-dated his time as chief executive. “We are trying to rebuild trust,” he added.

PTSB has set aside €145 million in total to repay mortgage customers who were denied a tracker rate. This is part of an industry-wide review that was ordered by the Central Bank of Ireland.

The bank told the committee that it currently has 441 vacant properties in its possession, of which 219 were owner-occupied and 222 were buy-to-let. The bank said it can take about six months to sell a property.

In an exchange with Fianna Fáil’s finance spokesman, Michael McGrath, Mr Masding said some 49,000 of its mortgage customers could make savings by switching from its standard variable rate of 4.5 per cent to its managed variable rate (MVR) product.

The MVR allows existing customers to avail of rates of between 3.7 per cent and 4.3 per cent depending on their loan-to-value ratio. Some 23,000 customers have already moved across.

Mr Masding also told Mr McGrath that fixed-rate mortgages would be made available to the bank’s existing customers in 2017. At present, only new mortgage customers can avail of fixed rates from the bank.