Permanent TSB (PTSB) has been criticised for turning down a request to appear before the Oireachtas finance committee on Tuesday to answer questions about its plans to sell €3.7 billion in mortgages to vulture funds.
The bank wrote to the committee saying it could not appear because it was in a “closed period”, which means that it is barred by stock exchange rules from discussing its finances in the run-up to publishing its 2017 accounts next month.
The lender also told the TDs and Senators that its answers would be limited when it does appear, as it has signed confidentiality agreements with a number of potential buyers for the loans.
PTSB's move sparked an angry response from the committee chairman, Fianna Fáil TD John McGuinness, who argued that as the State owns most of the bank, it was obliged to appear before the committee.
“As far as I am concerned, that is a refusal,” the Fianna Fáil Deputy said. “There is nothing to stop them from explaining to an Oireachtas committee the make-up of the loans that they are selling.”
PTSB said that it could appear before the committee in March, but Mr McGuinness rejected this, saying that the sale would be either completed or well advanced by then.
Controversy blew up over PTSB’s plans to sell 18,000 loans, due mainly from borrowers who have fallen behind with their repayments, when it emerged that the likely buyers were unregulated investment funds, or so-called vulture funds.
Mr McGuinness said committee members wanted to know how many of the loans were in arrears, by how much and for how long. They also wanted to know about the borrowers – whether they were just homeowners, or could a sale also include debts due from small businesses and farmers.
The Fianna Fáil TD also dismissed Minister for Finance Paschal Donohoe’s argument that he could not interfere in the bank’s business. “When the banks were in trouble, the government intervened then,” he said.
Vulture fund Bill
The Government is expected to agree on Tuesday not to oppose Fianna Fáil's private member's bill calling for vulture funds to be regulated by the Central Bank.
Mr Donohoe will outline his initial response to the Bill from Fianna Fáil’s Michael McGrath after the weekly Cabinet meeting.
However, it is expected that the Government will seek to deal with issues it may have with Mr McGrath’s proposals – such as technical or legal clarifications – at committee stage of the Bill.
Speaking on Tuesday, Mr Donohoe said he would attempt to work Mr McGrath’s Bill into Government proposals.
Fianna Fáil has warned that it wants action on the issue, and will not allow the Bill languish at committee stage.
The Department of Finance is understood to be examining proposals it put forward to regulate funds buying loan books when the issue first became controversial in 2014.
The initial plan was to make the ownership of credit a newly regulated financial activity. This followed a controversy over sales of mortgage loans by the IBRC, which took on the loan book of the former Irish Nationwide Building Society.
This was seen as a way of extending protection under the Central Bank code of mortgage arrears and consumer protection legislation to those whose loans were purchased. Previously, a voluntary code had been in place, but not all loan purchasers had agreed to comply with it.
The Bill proposed by Fianna Fáil also involves bringing the funds who own the loans under the regulation of the Central Bank, using the argument that regulation of the owners will offer greater protection for borrowers.