Sale of Non-Performing Loan Portfolio

Permanent TSB Group Holdings PLC

19 July 2024

 

19 July 2024                                                                                        

PERMANENT TSB GROUP HOLDINGS PLC

SALE OF NON-PERFORMING LOAN PORTFOLIO

Permanent TSB plc ("PTSB", the "Bank"), a wholly owned subsidiary of Permanent TSB Group Holdings plc has agreed the sale of a Non-Performing Loan ("NPL") portfolio (the "Portfolio") to Mars Capital Finance Ireland DAC, trading as Mars Capital ("Mars Capital") as part of a consortium arrangement with Mars Capital and certain funds managed or sub-advised by Apollo Global Management Inc. or its subsidiaries ("Apollo Funds").

As has been the case with previous transactions undertaken by the Bank, all customers whose loans are included in this transaction will continue to have the same regulatory protections under the Consumer Protection Code (CPC) and the Code of Conduct on Mortgage Arrears (CCMA) after the sale.

The loans within the Portfolio will continue to be serviced by PTSB for a period of up to six months and in this period, customers will continue to have the right to avail of PTSB's mortgage products, interest rates and services subject to applicability and/or terms and conditions. At the end of this period, legal title and loan account servicing will transfer to Mars Capital, which is regulated by the Central Bank of Ireland.  

This transaction will increase the Bank's Common Equity Tier 1 (CET1) Ratio by c. 35 basis points and the Total Capital Ratio by c. 45 basis points once fully completed. This transaction also alleviates the negative capital impact of regulatory calendar provisioning associated with this Portfolio, which based on existing risk weights and capital requirements is equivalent to c. €2 billion of new lending. The transaction reduces the Bank's Q1' 24 NPL ratio to c. 1.7% on a pro forma basis, 20bps lower than the European average of 1.9%[1].

Portfolio Overview

The transaction involves the sale of a non-performing Portfolio with a gross balance sheet value of €348 million and an overall risk weight intensity of c. 68%. The Portfolio comprises of 1,244 loan accounts secured on 1,489 properties. The loan accounts are linked to 1,022 borrowing relationships (a borrowing relationship can be a single borrower or two or more joint borrowers).

83% of the accounts in the Portfolio are classified as non-performing due to their arrears status. The average arrears balance for accounts in arrears is c. €71k 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. Typically, these are Interest Only or Part Capital & 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.

Other characteristics of the Portfolio includes:

·      Approximately 70% of the accounts in the Portfolio are on a tracker or fixed rate product, with the remainder being on a variable rate product.

·      925 Home Loans (PDH) accounts are included with the remaining 319 being Buy-to-Let accounts (BTL).

o  c. 85% of the PDHs are in arrears with an average arrears balance of c. €40,000.

o  c. 78% of the BTLs are in arrears with an average arrears balance of c. €186,000.

Post-Transaction Loan Servicing and Customer Supports:

The terms and conditions of individual loan accounts, including any 'Alternative Repayment Arrangements' agreed between customers and PTSB, remain unchanged and will continue to apply post the transfer to Mars Capital.

Over the coming days, the Bank is writing to all customers whose loans are included in the transaction, to inform them of this development. The Bank has published a set of frequently asked questions on its customer support hub www.ptsb.ie/TransferToMarsCapital to support customers with their queries. Customers can also contact the Bank's dedicated team on 1800 855 010 or [phone] if calling from abroad. Lines are open from Monday to Friday 8:45am until 6pm (excluding public holidays).

PTSB CEO Eamonn Crowley said:

"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. 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.

"We will write to all customers whose loans are included in this transfer over the coming days to assure them that they will continue to have the same regulatory protections under CPC and CCMA after the transfer completes. 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."

Mars Capital Finance Ireland CEO Colin Maher said:

"I'm delighted to welcome our new customers to Mars Capital. 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. 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."

About Mars Capital:

·      Mars Capital Finance Ireland is an Irish credit servicing firm, founded in Ireland in 2015, and regulated by the Central Bank of Ireland.

·      Mars Capital was acquired by the Arrow Global Group in 2017, a leading European fund manager specialising in credit and real estate. Arrow Global Group operates a significant capital investment programme along with innovative alternative financing options for businesses and is dedicated to expanding the services it provides in Ireland.

·      With a team of 300 people based in Dublin, Mars Capital manages more than €8 billion in assets.

·      Mars Capital CEO Colin Maher was recently appointed to the board of Banking and Payments Federation Ireland (BPFI) - the representative body for 125 domestic and international institutions operating in Ireland - recognising the important role of credit servicing firms in the Irish financial services landscape.

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For further information, please contact:
Denis McGoldrick Investor Relations [e-mail]  [phone]	Tríona Carroll Senior Corporate Affairs & Communications Manager [e-mail] [phone]

Note on forward-looking information:

This Announcement contains forward-looking statements, which are subject to risks and uncertainties because they relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Group or the industry in which it operates, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements referred to in this paragraph speak only as at the date of this Announcement. The Group undertakes no obligation to release publicly any revision or updates to these forward-looking statements to reflect future events, circumstances, unanticipated events, new information or otherwise except as required by law or by any appropriate regulatory authority.

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[1] Based on Q1'24 EBA Risk Dashboard

 

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