Finance Minister ‘can’t sit on fence’ on loan sale
Fianna Fáil has said it is “not acceptable” for Finance Minister Paschal Donohoe to wash his hands of the proposed sale of 20,000 mortgages by Permanent TSB, given he is the majority shareholder.
The party is demanding that unregulated foreign vulture funds are brought in under the control of the Central Bank.
The prospect of a full-scale row between the two parties escalated yesterday as both sides entrenched their positions.
Fianna Fáil finance spokesman Michael McGrath said State-owned, main street banks should not be allowed to sell on loans to unregulated vulture funds.
He said the minister’s consent is required for the proposed sale and while he cannot dictate to the bank, should he oppose the sale the bank could hardly ignore him.
“He will have to be consulted and will have to form a view,” Mr McGrath told the Irish Examiner. “He cannot sit on the fence and hide behind the framework. He will have to adopt a position and express it.”
In response to a threat by Mr McGrath to invoke the confidence and supply deal in a bid to stop the sale, the Department of Finance said that the planned sale does not require the permission of Mr Donohoe before proceeding.
However, the relationship framework drawn up between the bank and the minister does require that he be consulted in relation to any transaction worth €50m or more.
Mr McGrath said it was “unfair” that vulture funds could buy up mortgages at significant discounts but borrowers in arrears could not buy their loans at similar discounts.
The Cork South Central TD said the confidence and supply agreement with Fine Gael included measures to strengthen protection for mortgage holders whose loans are sold.
Social Protection Minister Regina Doherty said the Government has had a “relatively hands-off approach” in its dealing with the banks bailed out by the taxpayer.
“The regulatory arrangements that were made by the supervisor mechanism board between Irish banks and the State since we had to bail them out, were as such that we would have a relatively hands-off approach,” she said.
Asked about claims by Mr McGrath that the Government were rolling out the red carpet for vulture funds to buy up distressed mortgages, Ms Doherty replied: “That’s facetious of Michael, to be honest, I think he is better than that. Anybody who would have their loan book moved from one institution to another could have concerns.”
She said the Government were willing to listen to Fianna Fáil’s concerns.
In response, the department said: “Decisions in respect of loan book sales are the responsibility of the board and management of the bank.”
Permanent TSB’s non-performing loans are at 28% of its total loans, which is five times higher than the average in the eurozone.
Chairman of the Oireachtas Finance Committee, Fianna Fáil’s John McGuinness, said the minister’s position of refusing to intervene was “not acceptable”.
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