Permanent TSB has agreed to sell its controversial Project Glas loan portfolio to Start Mortgages - an affiliate of the so-called vulture fund Lone Star - for around €1.3 billion.

The portfolio contains around 10,700 non-performing loans, 7,400 of which are owner-occupier mortgages.

PTSB said of the 7,400 owner-occupier mortgages, 2,500 of those accounts are classified as "not co-operating", adding a further 3,850 accounts have either "refused treatments" or "the account has failed to operate in line with the agreed 'Treatment'".

Project Glas also includes 3,300 buy-to-let properties.

The planned sale by the 75% State-owned bank sparked political opposition earlier this year over the likelihood the loans would be sold to non-banking entities.

Following this the bank decided to withdraw about 4,300 split mortgages, worth around €900m, from the Project Glas portfolio.

These were loans where borrowers are meeting the terms of the split deal agreed with the bank. 

The average arrears time of all of the loans is three and a half years, with the average arrears value standing at €28,800.

The average loan value is €175,000.

It is the largest sale of its kind by a bailed-out Irish bank.

The average value of a loan in the portfolio is approximately €175,000.

The deal is expected to complete later this year.

This transaction will reduce the overall NPL ratio at PTSB from around 25% to 16%.

PTSB Chief Executive Jeremy Masding said that "protections which exist for homeowners transfer with a loan when it is sold. Mr Masding said that "Customers will continue to be afforded the protection of existing regulatory protections after the transfer".

He added: "Reducing NPLs is a necessary step for us to take to complete the rebuilding of PTSB as a viable, competitive lender."

Including its Glas portfolio, PTSB has reduced its NPLs by around 70% since 2013.

Taoiseach Leo Varadkar said: "Without stating the obvious, our view when it comes to the sale of these loan books is always to seek an assurance and try to make sure those people who are paying their mortgages and those people who are making a genuine effort to repay their mortgage aren't adversely affected by it in any way. It's something I want to talk to Minister [for Finance Paschal] Donohoe about."

"Legislation that is coming in the next session will make sure that vulture funds are regulated much more so than they are now, or investment funds or whatever you want to call them so that those consumer protections exist," he added.

Fianna Fáil Spokesperson on Finance Michael McGrath is calling on Start Mortgages to come before the Oireachtas Finance Committee to outline how it will deal with customers in arrears following the sale.

He said: "Portfolio loan sales such as this are the easy way out for the banks as they strive to reduce their level of non-performing loans.

"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 added: "Lone Star has refused on several occasions over this past eighteen months to come before the Oireachtas Finance Committee.

"Having bought these loans, they now have an obligation to come before us and explain what their strategy is for managing them."

The Department of Finance has said that loan sales, even by the banks in which the State has a shareholding, are solely the responsibility of the board and management of the banks which must be run on an independent and commercial basis.

A spokesman said the banks' independence is protected by relationship frameworks, which are legally binding documents that the minister cannot change unilaterally.

He added that the Government is progressing a Bill requiring the regulation of vulture funds by the Central Bank.

The Irish Mortgage Holders Organisation has condemned the sale of the loans.