Shares in Permanent TSB up 4.3% as it sells home loans

Project Glas loans secured against 10,700 properties sold to Start Mortgages

Permanent TSB will receive €1.3 billion in cash from Start Mortgages for a batch of bad home loans that had a face value of €2.1 billion.

News of the deal prompted warnings that some of the borrowers could lose their homes as the loans’ new owner would be less likely to agree deals on arrears than the bank.

Permanent TSB, which is 75 per cent State owned, said yesterday that it had agreed to sell loans secured on 10,700 properties (of which about 7,400 are private homes), where borrowers have fallen behind on repayments, to Start, which is backed by US private equity group Lone Star.

Start will pay €1.3 billion to buy the debts, matching the loans’ current value. The deal will give the buyer the right to seek repayment of the debts or take control of the properties used to secure them.


Permanent TSB’s decision to sell the loans – in a process dubbed Project Glas – is designed to ease pressure on its balance sheet, and was one of a number of such moves by Irish banks that drew protests from consumer groups and politicians earlier this year.

Jeremy Masding, Permanent TSB's chief executive, said existing regulations would continue to protect homeowners after the loans were sold.


About 7,400 are private homes and 3,300 are buy-to-let properties. On average, borrowers owe €175,000, are €28,000 in arrears and 3½ years behind with repayments.

David Hall, chief executive of lobby group the Irish Mortgage Holders' Organisation, accused the bank of selling 7,400 family homes to a "vulture fund" that would throw the owners out.

Mr Hall said Loan Star and Start did not offer deals to home owners who fall behind with their repayments, such as extensions, interest rate cuts, capitalisation of arrears – ie spreading the arrears through the loan’s remaining life – or split mortgages.

“It is reprehensible that Irish families have been thrown to vultures by a bank which only exists from State support and funds from the taxpayer,” he said.

Start did not comment. However, the company’s guide to dealing with arrears includes the options that Mr Hall outlined, as well as mortgage to rent, sale and surrendering the property.

Fianna Fáil finance spokesman Michael McGrath demanded that Start appear before the Oireachtas to outline how it intended to deal with the home owners.

He accused the bank of taking the easy way out. “It would be much better if Permanent TSB dealt with the loans itself and made case-by-case decisions involving restructuring the loans, writing off debt in some cases and only taking enforcement action as a last resort,” Mr McGrath said.

About one in four of loans on Permanent TSB’s books are “non-performing”, that is, the borrowers are in arrears or are not meeting repayments.

The deal will reduce PTSB’s non-performing loan ratio from 25 per cent to 16 per cent. Regulators want banks to cut the level to 5 per cent.

Mr Masding said the bank was committed to reducing the ratio to single digits in the near future.

“Reducing non-performing loans is necessary step for us to take to complete the rebuilding of Permanent TSB as a viable, competitive lender,” he said.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas