Permanent TSB has entered into an agreement that will see another portfolio of non-performing mortgages removed from its balance sheet.

The so-called 'securitisation agreement' will see over 6,000 loans moved to a special purpose vehicle which will be financed on the bond markets.

The nature of the transaction and the transfer of loans is similar to a mortgage sale.

Permanent TSB says it will continue to service the loans for a period of 6 months at which time the servicing will be transferred to Pepper Finance Corporation.

Pepper will at that point hold legal title to the loans and will handle day to day management of the loans.

The portfolio includes 6,272 loans that have been categorised as 'treated.'

In other words, the borrower has entered into an arrangement with the bank on the terms of payment of their loans.

All bar 133 of these loans are on homes that are occupied by the mortgage holder.

Over 4,000 of the loans are so-called 'split mortgages' where a portion of the mortgage has been warehoused and will be paid at a later date.

However, the bank says that the terms of the existing restructuring arrangements between PTSB and customers will be unchanged.

The transaction will further reduce the bank's level of non-performing loans to less than 10%.

It stood at 26% at the start of this year. 

In the summer, Permanent TSB announced the sale of a €2.2 billion portfolio of loans to an affiliate of the so-called vulture fund, Lone Star.

Pepper says the securitisation brings the total loan asset value of new servicing mandates secured by Pepper Ireland in 2018 to over €4 billion.

It will bring the total value of residential mortgages serviced by Pepper in Ireland, on behalf of investors and financial institutions, to over €10 billion, 80% of which are categorised as performing loans.

It confirmed that all customers will continue to be covered by the protections of the Central Bank's consumer protection codes and regulations as they did before.

Fianna Fáil Finance spokesman Michael McGrath said impacted customers must be protected, and not fall victim to a change in strategy in the management of the loans.

"The transaction announced today is undoubtedly better than an outright sale to a so called 'vulture fund' but important questions need to be answered as to how exactly this will work for the affected borrowers.

"It is my understanding that Pepper will become the legal owner of the portfolio and will make all decisions concerning individual loans. I will be seeking an assurance that the investor benefitting from the securitisation income stream will have no role whatsoever in the management of the loan portfolio. 

"This is important because we cannot have a situation where an investor at arm's length from the borrower is determining the overall strategy," he said.

However, Sinn Fein's Finance spokesman Pearse Doherty said the move amounted to an abandonment of over 6,000 families by the bank.

Mr Doherty said he was planning to introduce legislation in the coming weeks to block loan sales to so-called vulture funds.

"Each time there is a sale to vultures it sets a new precedent in government complicity. Project Glas was the first sale of family home loans by a State bank still in operation while today we see a State bank selling over 6,000 family home loans that it admits are meeting their restructuring arrangements.

"Banks should be made work through their individual loans and prevent them from selling them to vultures without the borrowers’ permission," he said.