PTSB is to sell a portfolio of non-performing mortgages worth €348m to a consortium made up of credit servicing firm Mars Capital and funds managed or advised by US based asset manager, Apollo Global Management.
The portfolio is made up of 1,244 loans secured on 1,489 properties and the loans are linked to 1,022 borrowers.
925 of the mortgages are on private homes, with 319 on buy-to-let properties.
83% of the loans are in arrears with the average balance owed in arrears of €71,000 and the average time in arrears is 22 months.
"The remainder of the portfolio is classified as non-performing by reference to regulatory guidelines and definitions," PTSB said in a statement.
"Typically, these are interest only or part capital and interest loans where the borrower and the bank have been unable to agree a credible capital repayment plan which will ensure the repayment of the outstanding balance (often the original amount which was borrowed) at the end of the agreed loan term."
The bank added that 85% of the loans on private homes are in arrears with an average arrears balance of around €40,000.
While 78% of the buy to lets are in arrears with an average arrears balance of €186,000.
"PTSB is undertaking this transaction to ensure that we remain a strong and resilient competitor in the Irish retail banking market, offering much needed choice to customers," said PTSB CEO, Eamonn Crowley.
"Like other retail banks, PTSB is required by regulation to hold additional capital for non-performing Loans, meaning that the amount that can be lent to first time buyers and other personal and business customers would have been impacted if this transaction had not occurred."
"As a result of today's announcement, we will be able to free up capital that will be used to support up to €2bn of lending into the Irish economy."
PTSB said that all customers whose loans are included will continue to have the same regulatory protections under the Consumer Protection Code and the Code of Conduct on Mortgage Arrears after the sale.
The bank added that the loans will continue to be serviced by PTSB for up to six months and in this period.
After that, legal title and the servicing of the loans will transfer to Mars Capital.
While terms and conditions of individual loans, including any 'Alternative Repayment Arrangements’ agreed between customers and PTSB, will continue to apply post the transfer to Mars Capital.
"Additionally, customers will continue to have the right to avail of PTSB’s mortgage products, interest rates and services up to the point of transfer, subject to applicability and/or terms and conditions," Mr Crowley said.
The bank is set to write to customers in the coming days to inform them of the changes.
"As a leading credit servicing firm with a team of over 300 people based in Dublin, Mars Capital is acutely aware of the imperative of supporting our customers throughout their mortgage journey," said Mars Capital Finance Ireland CEO Colin Maher.
"Our main priority is always to engage with our customers experiencing financial difficulties and/or who are worried about going into arrears to understand their circumstances and help them, using all reasonable means, to maintain long-term financial stability."
"We will write to each of our new customers individually in due course with more information on what this transaction means for their loan."
"We always encourage any customers facing difficulties to contact our Dublin-based expert team, so our highly trained advisors can discuss a range of tailored solutions and advise on what may be most suitable to support them."
The transaction will lower the bank’s non-performing loan ratio to 1.7%.
