Vulture funds give better deals, says Varadkar
Vulture funds give better deals to struggling home-owners than banks do, the Taoiseach has claimed.
Leo Varadkar said the pillar banks “extend and pretend” when customers are in financial difficulty, but that the much-criticised, unregulated credit-servicing firms are more likely to reach an agreement.
Mr Varadkar said the Government is working with Fianna Fáil on a bill brought forward by Michael McGrath to fully regulate foreign investment banks that take over the distressed loan books of Irish banks.
In a roundtable interview, Mr Varadkar said: “I’m always reluctant to use the term ‘vulture funds’, because it is a political term.
“What we’re talking about here is investment banks, investment funds, finance houses. You know, there are lots of different things and lots of different financial entities there and the term is used, ‘vulture funds’.
“But you’ll know, from the numbers, that they’re often better at writedowns of loans than our own banks are.
“Our own banks tend to ‘extend and pretend’, rather than coming to settlements with people.”
With close to 28,000 family home mortgages still in arrears of more than two years, Mr Varadkar pledged that anyone who was making a reasonable effort to pay their mortgage would continue to have the same consumer protections as if the loan was still owned by the banks.
“That’s our commitment, to make sure that people who pay their mortgages, pay their bills, are no worse-off as a result and have the exact same protections,” said Mr Varadkar.
Permanent TSB, Ulster Bank, and AIB have all sold off loans in recent months, and Bank of Ireland has not ruled out loan sales into the future.
Mr Varadkar defended the transfer of more than 6,000 Permanent TSB, non-performing loans to Pepper, in December, describing it as “essentially a regulatory requirement”.
“PTSB was required to get those loans off their books,” said Mr Varadkar.
“We wanted those that were split mortgages to be categorised as performing, but we just didn’t win that argument, so, unfortunately, they were counted as non-performing loans.
“If they had not done that, the bank would have found itself in a difficult position and, potentially, we would have had to put more money into the bank, which is something we would never do again and we managed to avoid that.
“But, secondly, now that PTSB has been able to reduce the number of non- performing loans on its books, it’s now in a better position to do what it should be doing, which is to issue new mortgages, new loans to people.
“We’d like to see that bank functioning again and offering loans and mortgages.”
to young people buying their first homes and offering loans to businesses again,” the Taoiseach said.
