Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

Addressing high non-performing loan, NPL, ratios is one of the key priorities of the European regulator, the Single Supervisory Mechanism, SSM. While great progress has been made at the Irish banks, the SSM has made it clear that further reductions need to be made. NPLs at the banks in which the State has invested have reduced by 60%, from €54 billion at their peak, to an estimated level of €22 billion at the end of December 2017. Permanent TSB's latest published NPL ratio, of 28%, is one of the highest in the eurozone. It is five times higher than the European average. Therefore, Permanent TSB must deliver a significant reduction in its NPL ratio within a framework that meets the expectations of the SSM, the European regulator.

At the time the half 1 results for 2017 were announced, the bank stated it was targeting an accelerated reduction in NPLs, aimed at achieving a high single-digit ratio over the medium term. As part of the strategy for achieving this, the bank listed a number of actions, including the sale of loans. It is clear, given the volume of borrowers who have refused to engage with the bank to date and the number of cases where treatments have failed, that achieving an acceptable NPL ratio will not be possible without consideration of loan sales. In addition, given the scale of the reduction required to address the bank's NPL ratio, and given the high percentage that private dwelling homes represent of the bank's balance sheet loans, the bank has determined that these loans must be included in any loan sale.

In this regard, Permanent TSB announced on 13 February that it was commencing the process for the sale of a portfolio of NPLs referred to as "Project Glas". On 20 February, the bank gave details of the portfolio of loans that is under consideration for sale. I shall now outline the key details. In total, 18,000 properties are linked to loans that are within the scope of Project Glas. Some 14,000 of these are related to private dwelling homes, PDHs. The total value of loans included is €3.7 billion, including approximately €1 billion of buy-to-let loans. Of the remaining €2.7 billion in loans, just under €2 billion is accounted for by PDH loans which are typically owned by customers who have not engaged with the bank and whose mortgages are unsustainable, or who have been unable to meet the terms of various treatments put in place. Project Glas also includes some loans that are currently subject to agreed forbearance measures but which remain categorised as NPLs. Therefore, this needs to be addressed. I emphasis that no loan has been sold yet and that we will not know how many will be sold for a number of months. The Minister for Finance, however, wants and expects Permanent TSB to be transparent with its customers when it comes to the sale process, as it evolves.

Under the terms of the relationship framework, the execution of loan sales does not require the Minister for Finance's consent. This is a legally binding contract that cannot be changed unilaterally. It was put in place at the insistence of the European Commission to protect competition in the marketplace. The bank is required, however, to consult the Minister for Finance on any "material matter", and loan sales are regarded as such. Although the Minister has been briefed on the matter, the formal consultation has not yet taken place but will in due course. As part of this consultation, the Minister intends pressing upon Permanent TSB that it has an obligation to give the customers timely and complete information in the event of the sale of their loans, and he will remind it of its responsibilities and the responsibilities of any purchaser under the consumer protection Act 2015 and the code of conduct on mortgage arrears, CCMA. Senator Norris will know that acronym.