Irish MPs look to block NPL sale over debt fund concerns

A row has broken out over attempts by a state-owned bank to sell a large portfolio of mortgage loans to 'vulture funds'.

Irish politicians are attempting to block the sale of €4 billion of non-performing loans (NPLs) by a state-backed bank, citing concerns around the role of private funds that invest in distressed assets, according to reports.

Permanent TSB, which has been majority state owned since it was bailed out during the Irish banking crisis, revealed plans to sell a portfolio of NPLs worth almost €4 billion last week. The loan book has been split into two, consisting of a €3 billion portion thought to attached to mortgages and €1 billion of buy-to-let loans.

Fianna Fáil,- the main opposition party that is also in a confidence and supply agreement with the governing coalition led by Fine Gael – said it will look to block the sale. The party told an Irish radio station it believes the debt will be sold to so-called “vulture funds” and wants to bring forward a bill to put tighter regulations on the sale of debt.

Fianna Fáil’s finance spokesman Michael McGrath told RTE that selling the debt to fund managers at a discount was unfair as homeowners were not allowed to buy the debt at a similar discount.

Concerns have been raised by a doubling in the number of High Court debt actions taken by foreign funds which acquired debt portfolios from banks during the financial crisis. Data compiled by StubbsGazette showed judgements secured by funds jumped from €5.6 million in 2016 to €13.6 million last year.

According to Ireland’s Department of Finance, Permanent TSB’s NPLs make up approximately 28 percent of its loan book, five times higher than the euro zone average. The government has argued that Permanent TSB has a regulatory obligation to reduce its level of NPLs. The European Central Bank has put pressure on a number of banks in Ireland and other parts of the EU to reduce the number of NPLs on their balance sheets.