Permanent TSB’s high standard variable rate (SVR) mortgages were this afternoon likened to a policy of “rent gouging” which has caused “extraordinary distress” to thousands of Irish families.
Senior executives from the bank faced questions from the Oireachtas Finance Committee today on the relationship between its SVR and the fact that 20 per cent of customers, including those on a tracker mortgage, were in arrears.
Chief executive Jeremy Masding said due to restructuring there would be a significant number of branch closures and redundancies. The bank will provide details next week.
Permanent TSB is 99.2 per cent owned by the State and gave the committee an update on its two recent meetings with the troika, its separation from Irish Life and the effect on the mortgage book of the 0.85 percentage point reduction in the standard variable rate since May.
Mr Masding defended the bank’s current position in the SVR market and pointed out that it had lowered its rates for variable rate customers twice since the end of April “even as other banks have declined to pass cuts on”.
He said the successive rate cuts had “significantly improved our position and we have ended our outlier status in the market”.
However in response, Independent Stephen Donnelly pointed out that even in spite of the two rate cuts, the bank still offered the second most expensive SVRs in the Irish market.
Mr Donnelly said over recent years Permanent TSB passed on just one third of the rate cuts announced by the ECB and he reminded Mr Masding that his bank’s SVR was more than 1 percentage point higher than AIB’s.
“The reality is that Permanent TSB has been engaged in straightforward rent gouging which has caused extraordinary distress for couples and for families,” Mr Donnelly said.
He pressed Mr Masding on the bank’s treatment of customers who were unable to manage their mortgage repayments. Mr Donnelly said while Permanent TSB’s acceptance of some responsibility for the financial crisis was welcome, he described its refusal to countenance a wide-spread debt forgiveness policy as “hypocritical”.
The bank’s CEO said such a policy would be a “catastrophe” for Irish taxpayers. He said a portion of a borrower’s debt could be written off after a negotiation process.
“If we have to write off some of the debt then I have the right to write off that debt but there is a huge difference between that and overtly setting out to write off the debt owed to taxpayers,” he said.
Mr Masding said distressed mortgage holders in arrears would be dealt with on a case-by-case basis but warned that if the bank deemed that a mortgage holder had the capacity to repay a portion of a debt even after a house had been surrendered or sold then it would pursue that customer.
