PTSB writes off €73m in mortgage loans

State-owned Permanent TSB wrote off €73 million in Irish residential mortgage loans in the first six months of this year, according to interim accounts published yesterday.

This was almost seven times the level of write-off in the same period of 2013, when €11 million was written off by the bank.

It indicates the scale of write-off now being applied by domestic banks as they get to grips with the significant arrears in their Irish residential mortgage books.

A note in the PTSB accounts states this was an accounting write-off where the bank “judges that the prospect of recovery at a certain point in time appears remote”.

“This does not prevent the group from continuing to pursue this outstanding debt and, where circumstances change, may result in the recovery of amounts previously written off,” the accounts add.

Starting from low base

Commenting on its write-offs, Shane O’Sullivan, managing director of PTSB’s asset management unit, said: “We’ve started from a small base but the debt write-off figure is increasing and we expect will continue to increase over time.

“That reflects the stage we are in the process. We’ve moved from the early engagement [with arrears customers] . . . and as we go we expect debt write-off will increase from a low base.”

At the end of June, PTSB’s owner-occupied mortgage book was valued at €15.5 billion while its buy-to-lets were €5.1 billion. PTSB also wrote off €10 million from its UK mortgage book, €14 million from its commercial property loans and €24 million in consumer finance from January to June.

The bank said it has 500 voluntary sales in the pipeline. This involves an upfront agreement on the residual debt left over after the property has been sold. Mr O’Sullivan said it expects borrowers to pay a “minimum” 20 per cent of the shortfall but the amount varies case by case.

A commitment must be given “up front [by the borrower] before a property is sold”. The shortfall can be paid over a period of up to 10 years.

PTSB also did 80 voluntary surrenders – where borrowers effectively hand back the keys – in the first half of this year and 200 in the past 18 months.

In relation to its treatment of the residual debt in these cases, Mr O’Sullivan said: “The outstanding shortfall is the responsibility of the customer and we will pursue the customer for that to the extent that it’s economically sensible . . .”

The bank completed 25 court order repossessions in the first six months, having done about 50 last year.

Mr O’Sullivan said PTSB has 24,000 restructures in place with its mortgage arrears customers. About 2,000 are short-term solutions involving interest-only payments.

Springboard book

Separately, PTSB chief executive Jeremy Masding said the sale of its Springboard subprime Irish mortgage book should be closed soon. "We'll look to make a decision in six to eight weeks," he said, declining to say how many parties were left. The interim report shows €302 million in loans and advances to Springboard customers held for sale by the bank.