Permanent TSB is poised to acquire up to €100 million of performing mortgages that originated from GE Capital's former Irish portfolio of subprime loans, which the US group sold at the height of the financial crisis.
The loans make up a portion of the €600 million of mainly non-performing loans which GE sold at a deep discount to Australian financial services group Pepper in 2012, in a deal that was mainly funded by Wall Street giant Goldman Sachs, according to sources.
It is understood that Pepper Asset Servicing, which used the deal, involving 3,500 mortgage customers, to get a foothold in the Irish market, has spent the past few years restructuring the loans and putting the portfolio on a firmer footing.
A final agreement with PTSB has not been signed yet. Goldman Sachs and Pepper had hired KPMG earlier this year to advise them on options to sell part of the former GE portfolio in Ireland.
Spokesmen for PTSB, Pepper and Goldman Sachs declined to comment on the process.
Struggles to grow
PTSB's move comes as the country's banks struggle to grow again after spending years shrinking their balance sheets. With the mortgage market hit by lending limits introduced by the Central Bank last year, lenders are looking increasingly at the prospect of buying portfolios.
This is understood to be the first such deal for PTSB since the onset of the crisis. However, Bank of Ireland has acquired hundreds of millions of euros of restructured loans from US private equity firm Lone Star, as well as performing portfolios from the liquidators of Irish Bank Resolution Corp and Danske Bank in recent years.
PTSB is restricted until 2018 from making acquisitions, under an EU state-aid restructuring plan agreed following its taxpayer bailout during the financial crisis. Under the accord, it can only buy assets with the prior written permission of the European Commission where the purchase price is less than 5 per cent of the group’s total assets. PTSB had €27.5 billion of assets at the end of June.
The planned acquisition comes just as PTSB nears the completion of its loan sales programme agreed under the EU plan. Earlier this month, it emerged that the bank is in advanced talks to sell its remaining £2.5 billion (€2.8 billion) of UK buy-to-let loans. The bank said in September that it had completed the €2.8 billion Irish element of its deleveraging programme.
Goldman Sachs
The €600 million par-value GE portfolio, meanwhile, was reportedly acquired in 2012 at 40c on the euro by Pepper, with Goldman Sachs acting as its partner. Goldman Sachs has also used Pepper to service hundreds of millions of further Irish loans the US investment bank has acquired in Ireland in recent years.
The latest set of accounts for Pepper Ireland show that its revenue rose 28 per cent last year to €37.8 million, with its assets under management increasing by €3 billion during the course of 2015 to €14 billion. The company’s number of employees in Ireland – based in Shannon and Dublin – was an average of 308 in 2015 compared to 160 in the previous year.
