The State's main mortgage lenders have ruled out following an initiative from Permanent TSB (PTSB), which has written to a couple of hundred buy-to-let (BTL) borrowers in default, offering to forgive any arrears or shortfalls on the sale of a property if they agree to a voluntary surrender.
AIB and Bank of Ireland, the country's two main mortgage lenders, and KBC do not intend to pursue a similar measure, people with direct knowledge of their strategies told The Irish Times on Wednesday. A source close to Ulster Bank said the lender does not have a formalised programme of debt write-off similar to PTSB and that it deals with customers on a case-by-case basis.
A spokesman for PTSB said on Wednesday that “conceivably” landlords who had refused to engage with the bank to date after falling behind in repayments could benefit from the plan.
Sale
However, he said this would be subject to PTSB’s analysis and knowledge of the customer showing that they have no means to make up the gap following a property sale.
He said that such a borrower would still have to provide an up-to-date statement of affairs as part of documentation surrounding any application to avail of the offer.
It is understood that the bank has initially written to a select group of BTL borrowers in recent weeks as part of a pilot scheme, which may be extended. Almost €1.56 billion BTL loans at PTSB were classified as impaired at the end of June.
"This would make PTSB the first bank to consider write-offs on a formal basis, though a number of banks have been conducting such a practice on an informal basis," said Goodbody Stockbrokers analyst Eamonn Hughes in a note to clients.
The development comes as PTSB comes under mounting regulatory pressure to deal with the highest ratio of non-performing loans among Ireland’s bailed-out banks, at 28 per cent of its total portfolio in June.
The Irish Times reported last month that the bank had written to a number of investment banks and accountancy firms seeking advisers on potential sales of soured loans to help deal with the problem.
‘Untreated’ loans
Loan sales, which could be launched as early as this year, will be focused on the €2.68 billion of PTSB’s €5.78 billion non-performing loans that are classified as “untreated”, either because the bank cannot find a sustainable solution or the borrowers have not engaged.
PTSB said the offer to write off remaining debt following a voluntary sale “is restricted to certain buy-to-let borrowers and is being made following a detailed review of the relevant loan accounts”.
“While this current initiative is limited in scope, it is one of a number of initiatives which we are pursuing to reduce the number of non-performing loans at the bank,” the spokesman said. “We believe it merits serious consideration by those customers who are invited to participate.”
PTSB introduced a so-called assisted voluntary sales programme at the height of the crisis for owner-occupiers and BTL borrowers, where most of the remaining shortfall is either written off or not pursued following a property’s sale. Such deals typically involved the borrower agreeing to be on the hook for some of the difference.
The spokesman declined to give details of the take-up of assisted voluntary sales.
