John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I welcome the members and the witnesses. We are joined today by Mr. Eamonn Crowley, CEO of Permanent TSB, Mr. Patrick Farrell, director of retail at Permanent TSB, and Mr. Kevin Hewston, interim chief operations officer with Permanent TSB. We will hear an opening statement from Mr. Crowley and then we will engage with the members on whatever questions they may have for the witnesses.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirement that they must be physically present, either here or in the Convention Centre Dublin, for these meetings. In the context of privilege, those members who are in the Convention Centre Dublin or in Leinster House have privilege, and those who are not may not have full privilege.

I invite Mr. Crowley to make his opening remarks.

Mr. Eamonn Crowley:

I thank the Chairman and the committee members for the invitation today. I am joined by my colleagues Patrick Farrell, our retail banking director, and Kevin Hewston, interim chief operations officer. This is my first appearance before the committee since being appointed chief executive of the bank in June of last year.

Firstly, I assure the committee that I will always listen to the committee members and give them whatever assistance I can, and that I want Permanent TSB to bring vigorous competition, better service, better products and better value to Irish customers and small businesses in communities across Ireland. I want to build a sustainable bank for the future and at the centre of any sustainable business is the responsibility it has to its customers.

As soon as I took up my position I set out a new purpose for Permanent TSB. This is centred on building trust with our customers and connecting with the bank’s community heritage, which has evolved over the past 200 years from our unique roots in communities throughout Ireland as the former Irish Permanent Building Society and the former First Trustee Savings Banks. I set out this purpose because I want Permanent TSB to be known for having a strong sense of social purpose and one that plays a broader role in Irish society. I strongly believe that maximising the return for customers leads to maximising the return for shareholders over the long term. At the heart of growing a truly sustainable business is the fair treatment of and good returns for customers, acknowledging the requirement for any bank to make a return on capital so as to be financially sustainable.

While we still have more work to do to further build trust with customers, and I acknowledge there are legacy issues from the past, we are taking steps in the right direction and over the last year we have put our purpose into action with a number of measures. We have kept all 76 of our branches open throughout the pandemic and committed to maintaining our existing branch network. In addition to the €30 million investment over the last five years, we have committed to investing a further €5 million over the coming year in refurbishing and maintaining branches to make sure they remain an attractive place for our customers to do business. We made significant cuts to our mortgage interest rates, both for new and existing customers, with greater fairness in our mortgage pricing and a shift towards offering the same rates to both new and existing customers. We have supported our customers who were affected by the pandemic with more than 13,000 payment breaks to give these customers valuable breathing space at a time of significant upheaval. We continue to work closely with some 1,000 customers who require ongoing support. We supported the provision of affordable and social housing with a partnership between the bank and the Ó Cualann Cohousing Alliance, in which the bank provides financial and operational support to the Ó Cualann group. We achieved the Business Working Responsibly Mark, which is the leading standard for corporate social responsibility and sustainability certification in Ireland. We have also announced plans to hire more than 180 new staff with a particular focus on IT skills, to complement a €150 million investment in our IT systems and digital banking capabilities. We have announced a major initiative to grow our presence in the SME lending market, which included teaming up with the State’s Strategic Banking Corporation of Ireland, to provide more than €50 million in new low-cost lending to small businesses.

Perhaps the single biggest example of our commitment to making things better for customers, our communities and the wider economy is our announcement in February that we are in discussions with the NatWest Group to acquire certain elements of Ulster Bank’s retail and SME banking business. This shows our ambition to become Ireland’s best personal and small business bank, a bank with deep roots in Irish communities that can bring even greater competition to customers at a time when customers need competition more than ever. If we are successful in agreeing commercial terms, Permanent TSB will be a bank with more customers, a larger footprint, greater reach and a greater ability to bring new and better products and services to retail and SME customers.

Before I conclude my opening remarks I must offer the committee an apology with regard to the level of detail I can go into at this stage about our discussions with the NatWest Group. I hope members will appreciate that both sides have agreed to conduct these negotiations in the strictest of confidentiality and I must also respect our disclosure obligations as a company that is quoted on the Dublin and London stock exchanges. I can say that I have been greatly encouraged at how constructively both sides are approaching these discussions. It is my aim that we will reach an agreement that will benefit customers and create value for the State through its shareholding in the bank.

I reaffirm our commitment to continuing to support customers as we exit the Covid-19 pandemic and in demonstrating our purpose of building trust with customers. I thank the committee.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I will now open up the floor for questions to the representatives of Permanent TSB.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome our witnesses and the chief executive's opening statement. Is it expected that the bank will be in the position to take up and fill the void or vacancies left when Ulster Bank moves on? To what extent will the Permanent TSB be in a position to replace the Ulster Bank's services countrywide? That is my first question.

Mr. Eamonn Crowley:

I thank the Deputy for the question. I cannot go into detail but I can provide some guidance on why we are talking to the NatWest Group and why we are engaging on the Ulster Bank operation. Permanent TSB has long and deep roots across Ireland in the provision of accounts services and mortgages to customers. It is our ambition to expand also into small business banking to provide competition, an area that we know is dominated by the two larger banks, AIB and Bank of Ireland. We believe there is an opportunity for us to increase our footprint by way of our branch locations, and with the breadth of our product through the Ulster Bank discussions.

It is our ambition to be in the communities in which we operate, serving the customers we have. We welcome customers from Ulster Bank and other banks and welcome providing the competition that is needed, particularly in the business banking area.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Is Mr. Crowley satisfied PTSB can maintain or expand the branch network, or can it do both? I ask given other lending institutions are reducing their branch footprint across the country.

Mr. Eamonn Crowley:

We made a public commitment, which I reiterate, to maintain our current branch network. When one looks at the Ulster Bank network and ours, we have many branches which are close to each other but there are other locations where we do not have a branch network. We are making a commitment to our branch network. We see our branches as being a core part of how to do business and see them as being core to the communities in which we operate. We see that customers appreciate that but they also understand the types of services we offer in branches are changing. Naturally, more transactions are going online but there is an added benefit for customers to come into a branch or indeed for our branch staff to go and visit customers in their home in the locality in order to assist them with mortgage applications, business applications or business banking. We therefore see the absolute importance of the branch network as part of what we offer and where we are today.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I welcome that. Does PTSB have any overhang of debt arising from the economic crash that is not resolved or is not provided for? Does the bank have a way charted for the future in that respect?

Mr. Eamonn Crowley:

Regarding customers who have encountered difficulties due to the Covid pandemic, our main area is the mortgage area. We have about 1,000 customers who have required additional support post the Covid payment break and we are working closely with those customers; in fact we are in contact every three months. We provided all those customers with a nine-month additional support to see how they would actually progress through the opening of the economy. On the business side of our support we have a number of customers but it is actually at a very low level given our exposure to the business side is not that great. That gives the Deputy the numbers and indeed our approach to supporting those customers.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Has the bank had any occasion to resolve any difficulties with borrowers over the past number of years arising from the economic crash and continuing on right up to the pandemic?

Mr. Eamonn Crowley:

With regard to the pandemic itself it is too early because as I mentioned we are providing customers with some breathing space until we see how the economy reopens. We are aware this relates to a couple of key sectoral areas which the committee will be well aware of also.

On solutions for customers whose issues arose from the financial crash, this is an area on which we as a bank have engaged extensively with the committee in the past, particularly around the whole area of non-performing loans, NPL, classification and the requirement for banks to reduce NPLs. We have reached solutions with customers and we continue to reach them, for instance in the mortgage to rent area where we have customers who continue to take up that opportunity to resolve their situation. It is an ongoing engagement with customers.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Mr. Crowley is satisfied PTSB can resolve any outstanding issues to the satisfaction of the bank and the customers.

Mr. Eamonn Crowley:

We do the best we can. In some cases, for instance, we have to go through a full court process with customers in order for them to then realise the mortgage to rent is the right option for them. That is unfortunately part of the way things can operate, in that some customers want to go through that court process before they get to a mortgage to rent solution. In other cases we have reached agreements with customers around long-term arrangements for payment and that is a continuing discussion. All banks still have residual issues arising from the global financial crisis of 2008. The number of customers in our bank has reduced in recent years due to deleveraging and other solutions we have adopted.

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

This is my last question, Chairman. When Mr. Crowley says the number of customers has reduced does he mean the number of customers overall or the number in difficulty?

Mr. Eamonn Crowley:

I am sorry. It is the number of customers in difficulty. Our actual customer number has increased and continues to do so. Our number of customers who have difficulty or require further support has reduced over recent years. As I mentioned, the most recent group of customers we are dealing with on a very careful basis are those coming out of the Covid pandemic. I mentioned there are about 1,000 mortgage customers in that category. If I can add something, 80% of those customers are making some payment and are engaging with the bank in a very proactive way. We in turn are engaging with them in a proactive manner.

Marie Sherlock (Labour)
Link to this: Individually | In context | Oireachtas source

I thank Mr. Crowley and his team for appearing before the committee. I acknowledge his commitment to retaining the existing branch network and indeed I think he committed to expanding it. However, I want to ask about the form that will take. I am conscious that in a number of its branches PTSB is withdrawing the cash desk service and moving to automated machines. I believe the number of such branches is 44 and Mr. Crowley might confirm that. We saw those actions taking place in April and then again this month. On the future plans for the network, how many more branches is PTSB intending to move to automated machines only? I ask because there is a sense, which I share, that it is a lesser service or a lesser presence in the community when compared with a branch that has a number of staff, as opposed to perhaps one or two, actually operating in the branch.

Mr. Eamonn Crowley:

I thank the Senator for her question. I will say a few words and then pass over to Mr. Farrell. There is no doubt we must all accept the world is changing with regard to all retail operations and we are a retail operation at heart, be that in a shopping area or indeed in the banking area. Part of our commitment to ensuring each branch is sustainable and will continue to exist is how we think about the services in those branches and how we think about changing them. In order to give the Senator more detail about our approach and where our thoughts are on that I will hand over to Mr. Farrell, if that is okay.

Mr. Patrick Farrell:

I thank the Senator. As Mr. Crowley has said, the branches are a core part of our business. They have been a core part of our community bank for over 200 years and we see them as a core part of our business going forward. During that period the network evolved and it is evolving today. The Senator is correct that 44 of our branches are moving to automated cash services but I will explain what that allows us to do. Our focus in those branches is to ensure we can stop doing the administrative tasks behind the counter and get our staff out front of house so when one comes into our branches one is met by a person. We acknowledge consumer behaviour has changed drastically, particularly in the last 15 months, towards more mobile and online banking. Our customers also really want to meet a person and the core of our bank at a community level has always been about people. We are still able to do 98% of the in-branch transactions that a person could have done when there was a cash desk but by using state-of-the-art automated machines we are able to get our staff out front of house to engage with our customers to help and assist them.

We also have a 100-strong external workforce in the community. Not all customers can come in to us. We have to bring our branch service into every home and business in the country. Covid has restricted that a little bit in the past while. We want to get that workforce back out again so they can engage with and look after our customers.

We have invested €30 million in the past number of years. As Mr. Crowley said, we are investing €5 million this year. We are also considering other brand formats. We use pop-up stores, particularly in shopping centres. We want to bring our services to the customer to make sure that we stay relevant and viable. We see our branches as a core part of our franchise and business, and people are at the heart of that.

Marie Sherlock (Labour)
Link to this: Individually | In context | Oireachtas source

I thank Mr. Farrell. What will be the loss of service by moving to an automated machine service within a branch? Did the 98% figure refer to transactions or services? I was not sure which will continue to be provided. What comprises the 2%?

I have a second question relating to what he said. Am I to understand that the bank is moving to a model of staff physically going out into the community to people's homes or will it be a telephone-based service? I would like to a clear picture of what exactly he is describing when he refers to going out into the community.

I share his view that people want to meet a person. He described it as an administrative task. People using cash desks meet members of staff. Whether people are standing in the foyer or behind a desk, customers are meeting a person. Our concern is that they will meet fewer people and will instead be pointed in the direction of a machine. To me, that equates to a lesser or reduced service.

Mr. Patrick Farrell:

I thank the Senator. The 2% refers to coin. In our branch model where we have automated cash services people cannot lodge or withdraw coin. That is the key difference in transactions. We have about three branches in each territory, and a community branch can accept coins.

To answer the Senator's second question, it is not about telephones. We are building up our direct bank with a phone and mobile banking service. I am talking about people on the ground. Prior to Covid, we had moved to getting our people out into the community. As I mentioned, we have a 100-strong workforce that can deal with customers, which involves current and deposit accounts, mortgages, consumer finance, etc. Covid has put paid to people visiting homes and businesses before now, but now that we are coming out of the pandemic it is about mobilising that workforce again to get back into the community. It is very much person-to-person, supported by our very strong investment in digital capability.

We can see a massive shift in customer behaviour and an appetite for digital banking capability. We are going to match that with investment in, and training of, our people to provide the human interaction our customers need.

Marie Sherlock (Labour)
Link to this: Individually | In context | Oireachtas source

I thank Mr. Farrell. My last question relates to mortgage competition. We have a particular issue in this country with regard to competition in the mortgage market. PTSB launched a new product in February or March that allows customers to fix their mortgage for a term of four years at 2.25%. However, this is only available to new customers rather than the existing customer base. Some might call that a form of dual pricing. I am sure PTSB has watched and observed the criticism and initiatives taken by this committee and legislators to try to outlaw dual pricing. Is it fair that PTSB is only offering this new product to new customers and excluding its existing customer base?

Mr. Patrick Farrell:

I thank the Senator. To reaffirm what Mr. Crowley said earlier, we have put a lot of effort into making our new fixed rates available for new and existing customers along with making significant reductions in our variable loan book. The market today is 80% fixed and 20% variable. We have also gone to great lengths to make sure we have a fair and competitive offering for our variable book and make our new fixed rates available to new and existing customers.

The Senator is correct that the four-year product is for new business only. That is the product that we want to be competitive on. We want to grow our business. We want to introduce something to the market from time to time that helps to grow that business. Our long-term aim is to make sure that we have fairness for all customers we have and are offering, as best we can, all of our products to our new and existing customers. From time to time, we will introduce targeted incentive-type products to try to grow our business, and drive competition in the market for consumers and create an overall better market for them.

Marie Sherlock (Labour)
Link to this: Individually | In context | Oireachtas source

I thank the Chairman. That is all from me.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I call Deputy Farrell.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Deputy Doherty will speak first.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Is that possible? I thought I had indicated.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Yes.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I thank the witnesses for coming before the committee. I am conscious that this is the first time the bank has appeared before the committee since the fine was handed down by the Central Bank and sanctions were imposed. I will start with a line of questioning in that regard. I wish to ask Mr. Crowley whether the Garda has been in contact with the bank regarding the tracker mortgage investigation.

Mr. Eamonn Crowley:

It has not.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. Crowley is aware that the Central Bank responded to questioning by me on whether it had files on suspected criminal activity regarding the investigation, and the director general for financial conduct confirmed it had those files. Can Mr. Crowley assure the committee that, to his knowledge, the files do not relate a State-owned bank, namely PTSB?

Mr. Eamonn Crowley:

We would not be privy to such files. Any interaction between the Central Bank would be between it and individuals. We may not be a party to that. I can confirm that is the case. There could be individual discussions going on that we are not aware of.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Okay. I appreciate that. I am trying to ascertain Mr. Crowley's knowledge at this point in time.

Mr. Eamonn Crowley:

Yes.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The FSPO upheld 18 complaints against PTSB last year. There are also 1,200 outstanding mortgage complaints with the ombudsman across the banking sector. Can Mr. Crowley take the time to outline to this committee the current position of PTSB regarding the tracker mortgage examination? I ask him to refer specifically the number of tracker customers and tracker mortgage accounts impacted by the bank's actions, the number of properties, including primary dwellings and buy-to-lets, lost as a result of the bank's actions, the net amount of compensation and redress that has been paid to customers to date and how many outstanding tracker mortgage cases there are with PTSB and the FSPO regarding PTSB. Has PTSB made any further provision for future compensation relating to the tracker mortgage scandal? If so, I ask Mr. Crowley to outline the amount and how many customers are involved.

Mr. Eamonn Crowley:

I do not have some of the detail the Deputy asked for to hand. His questions are quite specific. I am happy to come back afterwards with information on the financial aspects.

With regard to the tracker mortgage examination, we substantially completed it in 2017. We completed the investigation with the Central Bank in May 2019 and paid the fine at that stage. We admitted to misdemeanours with respect to publication. That was more than two years ago.

We continue to engage with the FSPO with regard to tracker cases where customers have, in some cases, raised those cases directly with it. They do not necessarily have to come to the bank to raise those issues, and can instead go directly to the ombudsman. In the region of 200 cases are with the ombudsman at this moment in time. We also have some cases of tracker customers, which are in a legal process through the court system.

There are approximately 80 cases at present. With regard to the number of impacted accounts, there are more than 2,000 and we have redressed and compensated these customers.

With respect to the comment on the 18 findings from the FSPO, naturally this is something on which we engaged with the ombudsman directly. Some of the findings were partial findings and others were full findings against the bank, depending on the nature of the engagement. It is fair to say the bank was probably one of the first, if not the first, bank in the tracker mortgage examination. Hence, the engagement with the ombudsman is more mature and we had more cases earlier than other banks. This is what may give rise to these numbers. We absolutely accept that engagement not only with the ombudsman but also with customers is very important to resolve this issue.

With regard to the number of properties that were at issue, I do not have the exact number in front of me but it was in the region of 40. I apologise, it is one of the items I just do not have to hand but it is something I will come back to. With regard to provisioning, naturally I mentioned the fact there are still in the region of 80 cases involved in the legal process. We have provisions in our accounts to cover legal costs and ongoing costs related to this engagement in the court process.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Mr. Crowley is aware the FSPO made a preliminary ruling on the issue of prevailing rates. This is something many committee members have been dealing with in different banks over a long period of time. This ruling resulted in one bank doubling its provisions for redress and compensation. Will Mr. Crowley clarify whether the ruling affected Permanent TSB customers? Of the 200 cases before the FSPO, how many types of groups are there? Are there specific groupings? For example, 40 could be to do with a prevailing rate issue. Does Mr. Crowley have any detail on this?

More generally, this is the first time the bank has come before the committee since the fine was handed down on 30 May. The bank was fined €21 million for serious failings across 2,007 tracker mortgage customers' accounts. This happened until October 2018, including during the tracker mortgage examination, which is shocking and damning. It calls into question the statements that representatives of the bank previously made to the public through this committee. In the words of the Central Bank, the fine reflected an unacceptable harm that Permanent TSB caused to its tracker mortgage customers for an extended period of significant overcharging, to the loss of 12 family homes and 19 buy-to-let properties. We know the fine was reduced from €30 million to €21 million under the settlement discounted scheme. What are Mr. Crowley's views on the fine and the reasons for it? More importantly, what is his message to those customers who were harmed? What does he say specifically to the Central Bank's finding that this harm continued during the course of the tracker mortgage examination?

Mr. Eamonn Crowley:

I thank the Deputy. With regard to his earlier questions, the prevailing rate decision did not impact Permanent TSB. With regard to the groupings, I have mentioned there are more than 200 cases with the FSPO rather than 200 itself. I do not have specific groupings at present but I will happily engage subsequently with the committee on this aspect.

With regard to the point the Deputy made on the finding and the fine, clearly the bank has apologised for what has happened. Indeed, it has apologised over an extended period of time. Unfortunately, it is a very difficult and bad history that not only Permanent TSB has had but the wider banking sector has had through the tracker engagement, through the financial crisis and as we approached the mid-2010s, with regard to how banks interacted. As an organisation this is something we have taken on board. We have paid our fine, which was significant, and we accepted the misdemeanours put forward in the settlement agreement. We have learned from it and we are trying to move forward. As we engage with the FSPO, we are trying to resolve cases on an ongoing basis with customers in this area. I can only reiterate the apology and the fact this should not have happened. We are trying to learn from these lessons and move forward with regard to how we develop our bank.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

There is much I could say. Knowing the impact the bank had on those families and the financial situation, not only those who lost their homes but those who were burdened by the threat of repossession and the overcharging the bank was involved in, which I have described as theft in the past and will continue to do so, I am sure that when they hear commentary such as "misdemeanours" it will be a red rag. The problem here is that Mr. Crowley's predecessor apologised through the committee but now we have learned from the Central Bank that at the time of those apologies, when Mr. Crowley's predecessor was saying the bank had learned a lesson and was apologising for what was happening, the bank was continuing to inflict harm on some of its customers through this process, right up until 2018. This is very hard to stomach. We need to see real action in terms of a customer focused proposal or view from the bank.

To look forward, I am on the record as looking to see Permanent TSB emerge as a third force in the market. It has stated its interests in acquiring a portion of Ulster Bank's loan book. It has been reported this could include up to €9 billion, or 60% of the loan book from non-tracker mortgages, small businesses and consumer loans. Given that the State owns 75% of the bank on behalf of the taxpayer, the State and taxpayer have an interest in any inquisition, as Mr. Crowley will understand. Will he clarify the portion of the loan book in which Permanent TSB is interested? We understand a memorandum of understanding has yet to be agreed between Permanent TSB and Ulster Bank. Will Mr. Crowley update the committee on the status of the negotiations, insofar as it is possible for him to do? What cost range would he give for the acquisition of the portion of the loan book I have mentioned? Previously it was estimated at just over €500 million. What would be the total capital reserves at Permanent TSB's disposal to fund such an acquisition? Will he confirm the TUPE regulations will apply to any transfer of loans from Ulster Bank to Permanent TSB? Will he confirm that Permanent TSB is in talks with Ulster Bank to acquire a portion of its branch networks?

I have asked a number of questions in which the committee and the public will be interested. We learned this morning that shares in Bank of Ireland are being sold. People will be questioning the timing of this because it is not good value for money at present. We will be interested to see whether this is the first act in a two-act scenario that includes Permanent TSB at a later stage this year.

Mr. Eamonn Crowley:

I thank the Deputy. As I mentioned in my opening statement, I cannot go into a lot of detail on the negotiations we are in with NatWest on Ulster Bank. I cannot comment on the size because it is subject to negotiation. With regard to the memorandum of understanding, the negotiations are constructive and they are progressing. Until we have a memorandum of understanding, I cannot make a comment on aspects of it, including the cost range. However, the cost range, in effect, is related to the amount of capital that would be required to support any loan book originated on a day-to-day basis through our own mortgage origination or acquired by way of acquisition. It is primarily related to the capital associated with it. It is governed by the size.

With regard to capital reserves, the bank-----

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

On that, and while it is subject to negotiation, Mr. Crowley is aware of the level of capital that is held within the bank.

Can he inform the committee what size of loan book could potentially be acquired from any third party without acquiring additional capital, either from the markets or the State?

Mr. Eamonn Crowley:

We have a common equity tier 1 ratio of 15.6%. That is a capital ratio which has increased during the crisis last year because of our management of our balance sheet, ensuring that we are keeping the bank in a safe place, and because of the management of the capital in recent years. We have some headroom in our capital base but that is subject to discussion with the Central Bank because it sets the capital requirements for the organisation on an annual basis. We have some headroom in that number and we are at a safe place today. The acquisition of any book would require some additional capital and that can come in lots of different formats, not just by way of capital injection. It can also come by way of discount on loan purchases and there are other ways it can be created but I cannot go into any detail. Therefore, any speculation on requiring support from shareholders includes all shareholders, not just our 75% of shareholders. We have 25% external minority shareholders who have also expressed interest in our transaction and expressed support for it. If we needed capital, we would have to access it from all shareholders, not just from our main shareholder but we are not at that level yet.

On transfer of business, it is fair to say that the acquisition of or transfer of a loan book would have TUPE legislation attaching to it. That is clear in our discussions.

On branches, I said publicly when I announced our interest in the Ulster Bank franchise that this included our interest in branches that Ulster Bank has, particularly in areas where we do not have the same level of coverage. We believe that those branches will complement our 76 branches across the country. There is a complementary aspect to the Ulster Bank franchise, which we believe will add to our bank, our scale size and our branch locations.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I wish Mr. Crowley every success in the negotiations. It is important that we have a third force in banking and that we are not left with a duopoly. I thank Mr. Crowley for those answers.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Gabhaim buíochas leis na finnéithe as a gcuir i láthair agus na ceisteanna a bhí á bhfreagairt acu. Bhí an plé an-suimiúil. Can the witnesses reflect on their expectation and anticipation of the movement of share prices, both for PTSB and the broader banking sector, given the broader economic environment from post-pandemic recovery and upward movement in interest rates?

Mr. Eamonn Crowley:

It is fair to say that share prices of bank stocks across Europe have been subdued for an extended period of time due to the impact of Covid and the uncertainty of outcome that gave rise to. Also, banking business models in Europe are somewhat under threat because of negative interest rates and excess liquidity. That is the case in Ireland more so than other European countries. Credit formation has been low in recent years arising from the crisis and the difficulties that gave. Also, saving rates have increased significantly. Savings among Irish households are up €30 billion in the last three years, with over €15 billion of that in the last year alone. There is an excess of liquidity over lending. That excess liquidity attracts a negative rate and is having an impact on the profitability of banks and the return we make as organisations.

To come back to the core point, if I take Irish share prices in their own right, they were much impacted by Covid and the uncertainty of Brexit. We saw that once there was some positive news on Brexit, together with a lifting of Covid restrictions or at least a visibility of that, Irish share prices have recently increased. Our share price has gone up significantly but I would also suggest that it is based on speculation around our previous discussion relating to the Ulster Bank franchise. In more recent weeks, the share prices have come down slightly but they are at a higher level versus where they were in recent years. I would suggest that there is an anticipated increase in commercial activity among wider society post pandemic. I appreciate that there is an element of society that may not benefit from that but generally there is an anticipation of extra spending. Banks, in the main, should be the beneficiary of that, including by way of our mortgage demand as we can see, which is significantly higher.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Táim buíoch as an bhfreagra sin. We can see that Mr. Crowley is anticipating that the share price will increase in the coming years. It is interesting in the context of the announcement today by the Minister for Finance and that is why I was asking the question on share prices.

I have another question on mica. We saw the protests on mica and the consternation around it. Can Mr. Crowley confirm whether PTSB had any mortgage accounts for properties affected by the mica defective blocks and if so, how many?

Mr. Eamonn Crowley:

I do not have the number to hand but I know it is a number of cases and it is not many for us. We are dealing with customers through our Letterkenny branch, which is a region of the country that is much affected by this issue, and that engagement goes on. At an industry level, the Banking and Payments Federation Ireland, BPFI, is engaging with the Department of Housing, Local Government and Heritage on the scheme. That may change in due course. We recognise that we have to play our part in a solution to the mica issue for our customers. We have experience of this with the pyrite issue and we had customers affected by this in the past. We assisted some customers who had to move out of their homes in order to get them repaired with their position. We also dealt with some customers who could not have the issue rectified. We have some experience from the pyrite issue and we recognise the part we have to play in the mica issue.

Mairead Farrell (Galway West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Would Mr. Crowley agree that any State redress scheme would essentially be restoring assets held on the bank's balance sheet and for that reason that there is a strong argument for the bank making a contribution towards the cost?

Mr. Eamonn Crowley:

I cannot comment on what the Government will propose. That is part of the scheme of arrangement. There is a recognition by Permanent TSB that we would have to play our part in that by dealing with and helping customers in a sympathetic way, understanding that their position is not of their own fault and that it is a wider issue in that respect. We want to deal sympathetically. As I mentioned, we have some experience from the pyrite issue, where there was a mixture of different impacts, some not as difficult and others being extremely difficult by way of the position of the customer's primary home and dwelling. We understand that we have to play our part.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

Gabhaim buíochas leis na finnéithe go léir as teacht isteach agus as an gcur i láthair seo a thabhairt dúinne. I would like to question the witnesses on the banking market in Ireland, which looks to be broken. What I mean by saying it looks to be broken is that there are two major players with 85% of the market at this stage. It is an oligopoly for all intents and purposes. Massive supplier power can determine all aspects of the market for themselves. What is the experience of the witnesses of this in how it affects Permanent TSB, given that it is a much smaller player?

Mr. Eamonn Crowley:

There are two aspects to the market. There is the business banking market, which is dominated by the two main banks.

It is an area where we are trying to provide alternative funding and targeted financing for business. I cannot go into the specific detail, but an element of our negotiations with Ulster Bank concerns aspects of its business book. We want to provide more competition in that area.

Turning to the mortgage side, I believe there is plenty of competition in this area. The market shares of the two main banks have been staying stable, or falling in some cases, in recent years. Our market share, for instance, has been increasing, as has that of others, such as the non-bank lenders. Therefore, it is quite a competitive market and there is a lot of information for customers. We must compete like everybody else in that respect. Naturally, there has been some comment, particularly arising from the Banking and Payments Federation Ireland, BPFI, report in February, regarding the level of capital required by banks to support mortgage lending. It highlights the competitive nature of how interest rates and costs are driven in respect of banks making a return. I believe there will be more debate on this aspect in due course. However, the retail area of banking is very competitive, no company has it its own way and market shares in recent years show that it is not a one-way bet. It is necessary to work hard for every mortgage and work with all customers in a proactive way to get them from application to draw down and, ultimately, to get them keys to their own homes. We have been doing that for many years, and we want to continue to do that to provide competition.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

I am approaching this subject from the perspective of the exit of Ulster Bank and KBC. We are looking at a shrinking market and a further concentration of the market into fewer hands. Situations like that never bode well for customers. Mention was made of capital requirements as a possible reason for banks to leave the market. What other reasons are there for banks to be leaving the market now?

Mr. Eamonn Crowley:

We must consider the scale of banks and their ability to make a profit, especially in an environment with negative interest rates. I talked to the previous Deputy about the impact of the financial models of banks across Europe and levels of profitability. It means it is more challenging for a bank to remain profitable. It is necessary for banks to be more efficient and to spread their costs over income which has tended to fall in recent years. Naturally, we are coming at this topic from a slightly different place because we are somewhat smaller as an institution. We believe we have the capability to grow and provide more competition. Indeed, we believe we can grow our income over the coming years. However, it is an equation which involves factors such as scale, size and the amount of mortgage business, for instance, undertaken as a core product in the country.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

This committee and Committee on Budgetary Oversight passed a motion seeking the development of a banking forum in which all the stakeholders in the sector would participate to explore how we can fix some of the dysfunction in the market. Would Mr. Crowley's bank be happy to participate in that forum?

Mr. Eamonn Crowley:

Absolutely. I read the paper produced by the Financial Services Union, FSU, which addressed this area and I met representatives of the union to discuss that paper in detail. We will take part in any forum which is established. It would be important for such a forum to represent all stakeholders in the banking sector, and there are many of them. It should also be chaired and managed in an effective way to ensure the forum considers all aspects of banking. In that regard, we have competitors that are not banks operating in the area of banking. It is important, therefore, that we have a level playing field when we come to think about banking services and approaches to how we offer such services to our customers. I reiterate that the banking sector is at the core of any properly performing economy and is an important part of it. Therefore, we must ensure that our banking system survives and thrives. I do not mean thrive in the sense of shareholders benefiting, but thriving in a way which will mean that we will continue to be able to offer services to our customers in a way that makes sense to them. We must make a return on those services, because doing so will enable us to lend more. If we build more capital, we can lend more money. That is the way it works.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

Over the years, I have done a lot of work for people in mortgage distress. I noticed that PTSB has sold many mortgages to investment funds, such as Pepper, for example. Is that still happening? If so, at what volumes is that occurring?

Mr. Eamonn Crowley:

We have no transactions under way now, but we previously sold non-performing loan portfolios which were acquired by Pepper. The bank's non-performing loans, NPLs, stood at 30% four years ago. We had reached long-term arrangements with customers regarding a significant portion of those NPLs, but those loans continued to be classified as NPLs. As a bank, after interaction with all our stakeholders, we had a requirement to reduce those NPLs. I reiterate that it would be extremely difficult for us to have discussions with Ulster Bank today if we still had an NPL ratio of 30%.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

Were any mortgages sold in 2020 to investment funds such as Pepper?

Mr. Eamonn Crowley:

We had one sale which related to an interest-only buy-to-let portfolio. It was a performing portfolio and, therefore, slightly different to prior sales. It was a portfolio created before the crisis. Interest-only loans do not exist as products today, and the sale was connected with that situation. It was more suitable for those customers to be in a long-term securitisation vehicle rather than, in effect, being with us as a bank, given the requirements we have regarding the risk profile of an interest-only portfolio.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

Turning to the general market, PTSB in March reported a loss of €166 million. I think that occurred because the bank set aside €155 million against possible loan defaults. Have we information regarding those loan defaults materialising, because that would serve to give us a picture of what is happening with small and medium-sized businesses in the economy now? Has that €155 million been exhausted, or has only a small proportion of it been used up?

Mr. Eamonn Crowley:

Regarding the business aspect, I will hand over to Mr. Farrell to comment on our business exposure shortly and to give his thoughts regarding the situation in the wider market. Turning to the utilisation of the €155 million, that provision in itself is for a long-term situation, including the impact of Covid-19. I mentioned in my opening comments that we provided 13,000 payment breaks. Approximately 1,000 customers from that total of 13,000 continue to require forbearance. Our view of, and thought process underpinning, that provisioning was that the numbers could have been higher than the 1,000 customers who have availed of this mechanism. I suggest, therefore, that we are adequately provisioned regarding any potential losses in future. However, such losses may not occur for several years as we continue to work with customers in respect of the resolution of the Covid-19 pandemic. We took a careful and prudent approach concerning our provisioning. Moving on to the business-----

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

Therefore, that €155 million has not yet been consumed.

Mr. Eamonn Crowley:

No, not in financial or in accounting terms. It still remains on our balance sheet as a financial provision. That is correct.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

That is fine.

Mr. Eamonn Crowley:

I ask Mr. Farrell to comment on the business market in banking.

Mr. Patrick Farrell:

I thank Mr. Crowley and Deputy Tóibín. We are very positive regarding the SME market. It is a relatively new area of business for us, but it is one that we are growing in significantly. To give some context in that regard, the half-yearly figures will show that we have drawn €50 million for small businesses across the country and that is the same amount as we provided in the whole of last year. Although in the market overall lending has fallen by about 23%, we will have doubled our lending. We hope to have done many times what we have done thus far by the end of the year, as we continue to grow our team, our products and services and our support for those customers.

A major part of that undertaking has been the Strategic Banking Corporation of Ireland, SBCI, fund. We have engaged with the SBCI and rolled out a €50 million fund as part of its future growth loan scheme.

That was twice oversubscribed. We see a huge opportunity in this market for us to step in and become a significant player in supporting small and medium-sized enterprises in Ireland. We look forward to that opportunity of supporting those customers in all the communities in which we operate right across the country. Although the market has fallen this year, we see our business growing strongly. We are continuing to invest in our people, technology and products. It is a good opportunity for us to step up and support local small economies right across the country.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

We hear regularly that one of the reasons small to medium-sized Irish builders cannot build at the moment is the lack of credit. In other words, the credit structure does not suit their building model and as a result international investment funds come in and soak up that market to a certain extent. What is the witnesses' experience of that? Why is there a problem with the credit facilitation of small builders?

Mr. Patrick Farrell:

We are pretty new in this market. Our main sectors are agriculture, retail, wholesale, transport and manufacturing as opposed to building and construction. We would have some construction on our books and are looking for businesses to support, particularly small builders and small construction businesses, but that is a very small part of our business because we are relatively new to the market. The key sectors we support are in agriculture, retail, wholesale, transport and manufacturing. We have been actively involved in those areas so far and construction has been a minor part of that heretofore.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

My final question relates to questions that were already asked. Is this not a poor time to sell banking shares, given what is happening?

Mr. Eamonn Crowley:

I assume the Deputy is referring to the announcement about Bank of Ireland this morning. I cannot comment on that but, in effect, we are selling banking shares every day because we are trying to put forward to our investors and new investors that they should buy our stock based on the strategy we are offering. We have ongoing engagement with the market with regard to putting forward our strategy and approach. In effect, that involves trying to engage buyers to buy shares off sellers and that happens every day. People sell shares in our bank every day and buy them. I cannot comment on the decision made on Bank of Ireland. It is not for me to comment on that.

Peadar Tóibín (Meath West, Aontú)
Link to this: Individually | In context | Oireachtas source

Sin sin. Míle buíochas as na freagraí.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

There is a specific issue before the banks now relating to the charging of negative interest rates on client accounts held by solicitors. I understand that is happening right across the banking sector. I ask the witnesses to comment on that.

Mr. Eamonn Crowley:

We are not charging negative interest rates.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

You are not.

Mr. Eamonn Crowley:

No.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

What authority do branches have when dealing with applications for loans and mortgages or accounts that are in difficulty and finding a solution for them? Are these decisions all centralised or will a branch have a certain level of discretion?

Mr. Eamonn Crowley:

I will ask Mr. Farrell to answer that.

Mr. Patrick Farrell:

Branches play a key role in meeting customers, understanding their issues or problems and helping them to build a case, whether they are in difficulty or looking to do something new. Ultimately, the front-line staff in the bank are the lenders but there are credit underwriting decisions around that. The credit underwriting is centralised but the lenders at the front line assist the customer. They are professional, qualified people and we have processes through which we bring the customer, whether that is for a new business or a customer in difficulty. The front-line staff play a key role in advising customers, getting them ready and helping them. We are supported by central colleagues, particularly in credit underwriting from a central perspective.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Is the decision made by the branch or is it centralised?

Mr. Patrick Farrell:

The branches are the lenders and the credit underwriting is centralised.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Okay. The decision-making is centralised.

Mr. Patrick Farrell:

I would always say that my team on the front-line makes the decision. We understand the customer, we know the business and we understand the operators of those premises. We make the decision on whether we lend, but then our credit underwriting team assesses that decision centrally from a credit risk perspective. It is very important that lenders on the front line understand their customers and businesses with which they are dealing. From a credit risk perspective, we get support centrally to manage that at a portfolio level.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How many applications for the SBCI fund has Permanent TSB dealt with up to now?

Mr. Patrick Farrell:

We have drawn 112 cases and €23 million so far. We got a fund of €50 million, and we were twice oversubscribed. We are working through the rest of the drawdown of that €50 million. We are also working with customers who do not have an SBCI fund to see how else we can meet their needs and are working with the SBCI on future funds that are coming in its plans down the road. This has been a very successful fund for us and for customers and we are looking forward to working with the SBCI on future funds.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

Very good. It is interesting to hear that because Deputy Tóibín asked about the small builders and the commentary we hear is probably from those who have been refused. It is encouraging that €23 million was drawn down across 112 applications and that the fund is oversubscribed. That is a fair indication of potential economic activity. That is a good thing.

I ask the witnesses to comment on digital banking capabilities. How far are they going with digital banking? Will they match Revolut or N26 or have they plans in that direction?

Mr. Eamonn Crowley:

I will comment on that. We announced in recent months that we are investing another €50 million in our digital capability. That is centred around upgrading our app and providing more opportunities for customers to self-serve by undertaking more day-to-day or routine transactions. That is something we will be bringing to the market next year so we will be at market standard in that respect. With regard to services like Revolut or N26, there have been discussions at BPFI level around creating a payment platform that would provide functionality like that of Revolut, for example. That is something on which we are working at an industry level. We recently engaged with the Competition and Consumer Protection Commission on how we can bring that to life by providing that additional service and competition.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

How is building affordable and social housing in partnership with housing alliances working out? In the future could that scheme cater for mortgages in distress, or is it strictly for lending to build social and affordable housing?

Mr. Eamonn Crowley:

Co-operation with the Ó Cualann Cohousing Alliance is around providing it with funding to expand its operations and management team and build more houses.

It has an ambition to build 1,800 houses over the next three years. We are not providing them with finance for development or support in that area, it is more so at a real level byway of the provision of direct assistance and money. Within the affordable housing scheme, there are customers who buy houses and take out mortgages as part of the schemes that are developed. We are interested in assisting and interacting with customers who are looking for a mortgage to buy an affordable house that is built by Ó Cualann and other providers. That is a win-win situation for all parties involved - PTSB, the customer, and Ó Cualann, which is building communities and has the ambition to build more around the country. We are very much aligned with what Ó Cualann is trying to do and we are trying to help it expand to have the operational capability to build more houses. We want to expand this co-operation even further.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I have three questions I wish to touch on briefly, with one picking up on a point made by the Chairperson. On the Central Bank's lending rules, there is flexibility in the loan-to-income limits. We understand that banks have withdrawn the flexibility of moving 20% above the thresholds. Is PTSB still operating under the guidance of the Central Bank? Is it still facilitating customers who are outside the strict loan-to-income limits and is it using the flexibility that the Central Bank allows?

Mr. Eamonn Crowley:

I will respond and then pass to Mr. Farrell. It has been in the public domain in recent weeks that we announced we could not provide any more exemptions at the moment. This highlights that we have been supporting customers in this area by providing exemptions. There has been demand for us to provide support for customers in this area. We announced that we are in the process of using up our exemptions, particularly in the loan-to-income area, of those rules. The situation is that we are out of those exemptions for the next number of months until we see how things go. I will hand over to Mr. Farrell to provide some additional detail on that.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

When Mr. Crowley says that PTSB is out of exemptions, is this because it has used them all up or has it decided to withdraw from using the exemptions?

Mr. Eamonn Crowley:

We have used them and, when looking at our pipeline, it is likely that we will use the remaining amount, up to the 20%. Unfortunately, we have to take a breather and see how volumes will go in the next number of months to see whether we get more capacity. That shows that we are supporting customers through those exemptions and using them for what they should be to supply customers with support.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

That is fair enough. On the question the Chairperson asked - Mr. Crowley responded to it - about the platform that the Irish Banking and Payments Federation is looking at, which has already been struck down because of competition laws, I do not understand why PTSB and other banks are designing this new platform between the banks here when there is a European platform that the banks could opt into. Why are the banks not opting into the European platform that is already there, that is, the single euro payments area, SEPA, instant credit transfer? It has already been built and is across Europe. It does not have to be done again. People could transfer money, as is done through Revolut, if banks sign up to this. Why are the banks creating their own platform and running into all these difficulties with the competition authority as a result?

Mr. Eamonn Crowley:

We believe it will provide a different customer experience. It is not just about the instant payment aspects, there will be other features that will be beneficial to customers.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Like what?

Mr. Eamonn Crowley:

I will hand over to Mr. Farrell who, as the retail banking director, is close to this project.

Mr. Patrick Farrell:

The service we seek to provide through synch payments, as an industry, will provide person-to-person payments. It will also provide person-to-merchant payments. It will provide other features like split bills. It has strong functionality and customer experience functionality.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

On that point - this is new to me - Mr. Farrell referred to "person-to-person payments", "person-to-merchant payments" and "split bills". SEPA instant, the European system which all banks can opt into, allows for person-to-person payments. Does the European SEPA instant system allow for person-to-merchant payments?

Mr. Patrick Farrell:

It has not evolved yet to the same level.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

PTSB's one does not even exist. It is just a theory, at the minute, that was struck down by the competition authority. Can Mr. Farrell explain the differences between what PTSB and other banks are planning and the European system. Do not tell me that it can do person-to-person payments, because that already exists in Europe, which all banks in Europe can opt into. It allows money to be sent from Germany to France, or wherever. The banks here are creating one system for Irish banking, which is not good because we want new competitors and there is already the issue with Insurance Ireland in terms of the commission's findings about cartel-like activities. What is the difference? Why do we not sign up to SEPA instant instead of creating something different? What is it that SEPA instant does not provide, which PTSB and the other banks want to provide to customers here?

Mr. Patrick Farrell:

It is the intention that this system, in the medium to long term, will be able to plug into a European system. The platform and service are to be provided by a company called Sia, which is an Italian company. The intention is that when the European system is at a level that we can plug into, this would become part of the European-wide system. We want to get it off the ground. The functionality that is available to customers in this system is significant and it is something that we want to develop in an Irish market. The intention - going back to Deputy Doherty's point - is to plug into a European-wide system at a time when it is ready.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

That is as opposed to opting into the European system and not developing their own system. PTSB and the other banks do not have to develop their own system, they can operate under the European system.

Mr. Patrick Farrell:

At the moment, it does not provide the same level of service that this system will provide.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

I still have not been told what the differences are. What is the additional service that PTSB and other banks plan to provide that is not available through SEPA instant?

Mr. Patrick Farrell:

On the SEPA system, we offer SEPA payments. Customers can make SEPA payments today when they make payments in our branches, but it does not provide the person-to-person instant payments service that this new platform will offer. It does not provide the functionality-----

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

SEPA instant does provide for that.

Mr. Patrick Farrell:

That is not something that exists in Ireland at the moment. The features in this new platform will give customers greater functionality.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

As we are going around the houses on that, perhaps we will come back to it at a later stage. My final question refers to the issue Deputy Farrell raised about mica. Can Mr. Crowley elaborate on his comments? Being helpful to customers can mean ten different things. It can mean low interest rates. It can mean forbearance in terms of mortgages. The core issue here is what was expected by my colleague, Deputy Mac Lochlainn, and I when we wrote to the banks, and by the MICA Action Group at the time. We were looking for PTSB and other banks to support the redress scheme by contributing to it, but they refused to do so. Does Mr. Crowley foresee a scenario whereby there would be a contribution from the bank as a result of the mica redress scheme?

Can Mr. Crowley explain how a loan for a mica affected property is classified on the books of PTSB? Let us be clear on this. We have seen that one third of homes that applied for the scheme in Donegal need to be demolished, therefore, their asset value is zero. Some of those assets are secured by PTSB loans. How are those loans classified on the books of PTSB?

Has the fact that the assets are now valueless triggered an impairment review? How is PTSB dealing with those assets and what are its obligations with regard to reporting? There are clear obligations for impairment of loans. One of those obligations relates to cases where the value of the assets that are secured on the loan drops, and in these cases the value has, unfortunately, dropped significantly.

Mr. Eamonn Crowley:

I thank the Deputy. He mentioned that he heard my response to Deputy Mairéad Farrell. That response centred around the fact that at an industry level, there is an engagement through the Banking and Payments Federation of Ireland, BPFI, with the Department of Housing, Local Government and Heritage around the scheme that will be put in place. We understand that scheme may change but, as I understand it from the BPFI, we are not aware of the details. There is absolute acceptance that PTSB must play its part by supporting customers who, for reasons beyond their own control and creation, have been affected by this issue. We have experience of cases where customers were partially or fully impacted by the pyrite issue. We moved to support those customers directly.

I also mentioned that we are engaging with some customers on their position, particularly through our Letterkenny branch. I am not aware of any customers who have been exposed to mica by way of their classification but I can come back to the Deputy on that point. If he wants, I can engage directly with him on any impacted customers in his constituency or elsewhere. I would be happy to do that.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

The classification of those loans would be important. The reason I make that point is the State is about to ensure, through a significant amount of spending, that those assets are restored to their original value. That is of considerable benefit to PTSB and other banks. Unfortunately, what I am hearing from Mr. Crowley is that the support the bank will provide, if we look at the pyrite scheme, relates only to forbearance, dealing with interest-only at a time when the work is being done, or soft loans in terms of rental accommodation and other things. It is not about contributing to the cost of restoring assets on the bank's balance sheets. As the CEO of PTSB, does Mr. Crowley believe the bank has a role in that domain? Has it a role in making a financial contribution to assist the overall amount that is to be spent on this scheme to assist these homeowners?

Mr. Eamonn Crowley:

I understand the space the Deputy is referencing here. Take a hypothetical example where we have loaned €100,000. A contribution could be around discussing that liability and what that debt should be, given the underlying collateral value, the value of the house or the fact that the house itself must be demolished. I assume from what the Deputy has said that he would then be looking for a further contribution from the bank to the customer, above and beyond the liability a customer may have as a mortgage. That would have to be discussed at an industry and wider level to ensure a common approach across all banks. I would happily discuss it.

Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

Is it something to which Mr. Crowley is open, as CEO of PTSB?

Mr. Eamonn Crowley:

With regard to how we think about the debt that is owed, I am open to it. With regard to a contribution, that deserves a wider discussion and debate. I cannot answer for PTSB alone in that respect. I must think about the wider industry and the connection we have with the Department of Housing, Local Government and Heritage. The engagement should revolve around any mortgage debt that exists now.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

In the context of the discussion Mr. Crowley has had with Deputy Doherty on the Revolut and N26 models, will Mr. Crowley give us a written submission outlining where the BPFI is going in the context of its platform and the difference between its platform and those used by Revolut and N26? It would give us some insight as to where that is going, what is happening and what the plan is.

Tracker mortgages are another issue. Is PTSB at the end of dealing with all the tracker complaints? Has it finished dealing with them?

Mr. Eamonn Crowley:

The first issue about which the Chairman has asked is one I will take up with the BPFI. From our interaction, it is clear that the Synch Payments programme needs to be explained to the committee in greater detail. I will pick up on that matter with the CEO of the BPFI in due course.

On the question of trackers, I mentioned to Deputy Doherty that we have approximately 80 cases going through the legal process and more than 200 cases with the Financial Services and Pensions Ombudsman. That is the nature of the interaction we have with regard to the tracker mortgage product. We have some occasional interaction with customers who contact us directly but it is primarily in those two areas.

John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

If members are satisfied with that, we have come to the end of our meeting. I thank our guests for their attendance and I wish them well.