PTSB said the portfolio of owner-occupier and buy-to-let mortgages are mostly in deep arrears. The average balance for accounts in the portfolio that are in arrears is more than €71,000 and the average time in arrears is 22 months.
The bank said it has agreed the sale of the portfolio of mortgages to Mars Capital as part of a consortium arrangement with Mars Capital and certain funds managed or sub-advised by Apollo Global Management.
The transaction involves 1,244 loan accounts secured on 1,489 properties. The loan accounts are linked to 1,022 borrowing relationships and the portfolio has a balance sheet value of €348m.
According to the bank, 83pc of the accounts are classified as non-performing due to their arrears status. The rest are classified as non-performing by reference to regulatory guidelines and definitions which can include interest only deals where the bank and borrower have not been able to agree terms for repayment of capital at the end of the mortgage period.
Approximately 70pc of the accounts are on a tracker or fixed-rate product, with the remainder being on a variable rate product. There are 925 owner-occupier loans and 319 buy-to-lets.
The bank said customers whose loans are included will continue to have the same regulatory protections under the Consumer Protection Code (CPC) and the Code of Conduct on Mortgage Arrears (CCMA) after the sale.
Under the terms agreed, loans will continue to be serviced by PTSB for a period of up to six months and in this period, customers will continue to have the right to avail of PTSB’s mortgage products, interest rates and services. At the end of this period, legal title and loan account servicing will transfer to Mars Capital.
For the bank, the sale will increase its regulatory capital – in theory boosting its ability to lend. The Bank’s Common Equity Tier 1 (CET1) Ratio will rise by approximately 35 percentage points and the Total Capital Ratio by approximately 45 percentage points once fully completed.
The transaction reduces the bank’s NPL ratio – the share of bad loans on its books – to around 1.7pc, below the European average.
Over the coming days, PTSB said it will write to all customers whose loans are included in the transaction, to inform them of this development.
The bank has also published a set of frequently asked questions on its customer support hub www.ptsb.ie/TransferToMarsCapital.
Commenting on the sale, PTSB CEO Eamonn Crowley, said retaining non-performing loans on its books hits the bank’s ability to make new loans.
“PTSB is undertaking this transaction to ensure that we remain a strong and resilient competitor in the Irish retail banking market, offering much-needed choice to customers. Like other retail banks, PTSB is required by regulation to hold additional capital for non-performing loans, meaning that the amount that can be lent to first-time buyers and other personal and business customers would have been impacted if this transaction had not occurred. As a result of today’s announcement, we will be able to free up capital that will be used to support up to €2bn of lending into the Irish economy,” he said.
Mars Capital has been active in the market here since 2015 and has a team of 300 people in Dublin managing more than €8bn in assets.
