The Department of Finance has said that the planned sale of 20,000 mortgages to vulture funds does not require the permission of Minister Paschal Donohoe before proceeding.  

However, the Relationship Framework drawn up between the bank and the Minister for Finance does require that he be consulted in relation to any transaction worth €50m or more.

The department made the statement as Fianna Fáil’s finance spokesman Michael McGrath stepped up objections to the sale.  

He said it was "unfair" that vulture funds could buy mortgages at significant discounts but borrowers in arrears could not buy their loans at similar discounts.  

He said the confidence and supply agreement with Fine Gael included measures to strengthen protection for mortgage holders whose loans are sold.  

"Decisions in respect of loan book sales are the responsibility of the board and management of the bank," the Department of Finance said today.


It said Permanent TSB's non-performing loans are at 28% of its total loans, which is five times higher than the average in the euro zone.

"In any loan sale, the contractual terms of borrowers or indeed tenants remain in place post the loan sale. It is also important to stress that the Central’s Code of Conduct for Mortgage Arrears still applies," the department added.

The department said that PTSB has a regulatory obligation to get the level of its non-performing loans down significantly over the next few years.

"This is a requirement of the SSM in Frankfurt in conjunction with our own Central Bank in Ireland," it added.

Irish banks have come under pressure from the European Central Bank to get the level of non-performing loans down to under 5%.

But they have been slow to move against individuals who either can not or will not pay their loans back.

The banks see selling tranches of non-performing loans to vulture funds as a possible solution.

But Fianna Fáil argues that these vulture funds are unregulated. 

The party wants to introduce legislation to stop the banks from selling the loans onto these funds until they are at least regulated by the Central Bank.

Fianna Fáil's finance spokesman said that state-owned, main street banks should not be allowed to sell on loans to unregulated vulture funds. 

Mr McGrath described as "chilling" the fact that a loan underpinning someone's home, land or business could be owned by a vulture fund, over which the Central Bank would have no control. 

Irish farmers, small business owners and mortgage holders are owed a lot more, he stated.

Mr McGrath pointed out that even fully performing, restructured loans could be sold off in a bundle by the banks to vulture funds. 

He said that banks are taking the "easy way out" because they do not want to engage with customers.

Instead, the banks would prefer to take a hit by selling off loan portfolios to vulture funds, who are taking a short-term perspective on these loans and will not want to engage with customers when restructured loans expire, he said.

Mr McGrath said Fianna Fáil's preference would be that the Irish banks engage with the loans themselves.

If, however, they were to sell the loans, then they should be sold to fully regulated entities.


The chief executive of the Irish Mortgage Holders Association says PTSB is not the first and will not be the last bank to sell-off loan portfolios.

However, David Hall said the difference in this sale is that a significant number of the loans are split loans and involve customers who engaged with the bank and are paying down their loans.

Speaking on RTÉ's Today with Sean O'Rourke, Mr Hall questioned why these non-performing loans were not sold to Bank of Ireland or AIB, in order to give customers some level of protection.

Mr Hall said the banks and banking system exists because citizens money was pumped into it, at the behest of politicians.

He said allowing vulture funds to profit ahead of protecting citizens was wrong. 

A Relationship Framework, drawn up between the bank and the Department of Finance ahead of a sale of shares in the bank, says that the Minister for Finance should be consulted on any "material" matters at the bank.

This includes any acquisition, investment or disposal that is likely to be worth more than €50m, or anything that is "likely to create clear and significant reputational issues". 

However, the bank's board retains the final decision on any such matter.