Personal finance service provider Permanent TSB has agreed the sale of a portfolio of performing buy-to-let mortgages.
The portfolio, worth about €1.2 billion, has been sold to Citibank London, the UK branch of US-based Citibank.
The deal also involves the sale of a pool of about 3,700 buy-to-let loan accounts.
All of the loans are on buy-to-let properties and mainly consist of interest-only repayment terms, according to Permanent TSB.
The loans sold have an average balance of €375,000 and are classified as performing from a regulatory perspective. The average remaining term for the loans sold is 10 years. The bank also revealed that no loans that received a payment holiday during the coronavirus pandemic were included in the sale.
The bank has pledged to continue to service the loans for up to six months at the end of which, legal title and loan account servicing will transfer to Pepper Finance Corporation and they have reassured customers that the sale will have no impact on them or their repayment terms.
Permanent TSB said the “terms and conditions of individual loan accounts are unaffected by this transaction and will continue to apply.”
The sale with Citibank UK is also expected to increase Permanent TSB’s non-performing loans ratio from 7% to 7.7%. Once the deal is complete, the bank will receive €1.2 billion which will be used for ongoing corporate purposes.
Permanent TSB’s Chief Executive, Eamonn Crowley, said of the sale: “This transaction will increase the bank’s transitional Total Capital Ratio by 2.1%, strengthen the balance sheet and provide us with resources to compete in our core markets of personal mortgages, personal lending and SME lending.”
“All applicable terms and conditions continue to apply, meaning that customers will be afforded the same consumer protections upon completion of the transfer.”
“Like Permanent TSB, Pepper is regulated by the Central Bank of Ireland and is required to comply with consumer protection legislation when dealing with customers,” he added.
The Chief Executive also revealed that he expects around 1500 to 2000 loan accounts may require additional forbearance and assistance as they come out of the extended payment breaks afforded to them during the coronavirus pandemic.
The increase in its capital position that the sale will bring leaves Permanent TSB well placed to begin competing in its core Irish mortgage, personal and SME lending segments according to commentators.