PTSB securitisation deal to become the norm with EU debt proposal – Carthy
Sinn Féin MEP Matt Carthy has said that the Permanent TSB deal to sell thousands of mortgages in a securitisation deal will become the norm under a new proposal from the EU. The Commission’s proposal for an EU Directive on developing a secondary market for non-performing loans
Speaking from Strasbourg, Carthy said: “PTSB’s move to offload thousands of mortgages in a securitisation deal is an indication of what is to come if the EU Directive on credit purchasers, credit servicers and the recovery of collateral proceeds.
“The PTSB deal is an absolute disgrace. The PTSB split mortgages are classified as non-performing due to incompetence by the bank in designing the contracts, not through any fault of the borrowers. What we have here is a majority publicly-owned bank, that was rescued in a bailout, selling out thousands of its customers to debt vultures – including more than 4,000 customers who engaged with the bank in restructuring agreements.
“We can already see how opaque the securitisation market is through this deal. PTSB refuses to inform Irish elected representatives of the owners of the purchasing fund, though Pimco is thought to be the buyer. Company records show that the securitisation vehicle, Glenbeigh Securities 2018-1 DAC, is administered by Wilmington Trust SP Services, which specialises in providing secretive Delaware-based trust services. The director of this shell company, Alan Geraghty, also finds the time to hold the directorship of 269 other companies.
“This proposed EU Directive is designed to promote the use of vulture funds and securitisation vehicles in order to move this bad debt off the banks’ balance sheets and into the opaque and unregulated shadow banking sector.
“For several years, we have witnessed the ECB and Commission peddling securitisation as the solution to all of the EU’s economic woes. Moving hundreds of billions of euros of bad debt into the shadow banking sector through the securitisation of non-performing loans is incredibly misguided, and will cause major new risks to financial stability. Mortgage-backed securities in particular played the key role in the 2007-2008 crisis.
“This proposal from the Commission is extremely concerning. It will empower banks to seize there customers’ collateral through an out-of-court recovery mechanism, and will result in borrowers, including mortgage-holders, being pursued more aggressively by vulture funds and debt collectors.
“The Commission has clearly not taken consumer protection issues or fundamental rights into consideration when conducting its impact assessment. The proposed Directive should be withdrawn, and I will be organising a campaign for its withdrawal together with allies across the EU in the coming months.” ENDS