Ulster Bank won’t rule out sale of restructured loans
ULSTER Bank’s chief executive has refused to rule out including mortgages of customers who have restructured their home loans in a sale to so-called vulture funds.
Around a quarter of Ulster Bank’s 20,000 non-performing home loan customers are refusing to engage at all with the bank, and are likely to form the bulk of a potential sale of 7,000 mortgages by the bank to meet European Central Bank (ECB) demands to shrink the bad loans on its books.
State-controlled Permanent TSB is already pushing ahead with a sale that includes 14,000 residential home loans with combined debts of €2bn to meet the same ECB drive.
US distressed-loan investors, dubbed vulture funds, are reckoned to be the likely buyers. The Permanent TSB move has been widely criticised, with pressure heaped on Finance Minister Paschal Donohoe to use taxpayers’ 75pc stake in the bank to force a change of tack.
Fianna Fáil’s Michael McGrath has also proposed legislation aimed at bringing buyers under the regulatory control of the Central Bank.
A sale by Ulster Bank will be less politically fraught than the PTSB plan, because it is not State owned. But the admission by the bank that a sale could be in the works comes just days after Permanent TSB highlighted the scale of the impact of the ECB’s tougher regime.
Ulster Bank’s chief executive Gerry Mallon, who is due to stand down later this year, told the Irish Independent yesterday that the ECB was “out of toler- ance” with banks that have a big stock of bad loans. Ulster Bank’s €4bn of problem loans accounts for 16pc of all lending, he said. “The ECB wants that to be closer to 5pc.”
The bank’s preference is to work with customers, but a loan sale is also potentially in the works, he said. About a quarter of Ulster Bank’s 20,000 non-performing mortgage customers are classed as “non-engaging” by the lender, meaning the bank gets no response when it contacts them, he said. If there is a portfolio sale it will be focused on that “worst end of the problem”, he said.
But he refused to rule out other loans, including restructured mortgages, being sold.
Meanwhile, Ulster Bank set aside €192m last year to cover the costs, including compensation and refunds, for customers who lost homes or were overcharged as a result of the tracker mortgages scandal.
The bank’s adjusted operating profit last year was €109m and the bank paid a €1.5bn dividend to its owner RBS in January.