# ptsb before the Oireachtas Finance committee this morning at 10 am



## Brendan Burgess (28 Sep 2017)

http://www.oireachtas.ie/parliament/watchlisten/watchlive/committeeroom2/


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## Brendan Burgess (28 Sep 2017)

They are off...

Jeremy Masding 
Stephen Groarke
Shane O'Sullivan
Ger Mitchell  CBI Tracker Review


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## Brendan Burgess (28 Sep 2017)

Jeremy Masding 

1)ptsb is well positioned now to make a contribution to the economy and will repay the money given by the taxpayer
We are competing strongly. And have increased our share of the market.  
2) A strong ptsb is a goal worth fighting for.  A relatively small organisation taking market share from the pillar banks. 
3) Having navigated the financial crisis, we need to deal with non performing loans and plan for the future.  There will be significant moves on this in the months ahead
4) A failure to make the right and tough decisions also has consequences for the full customer base
For example - mortgage arrears - 30,000 long term solutions offered to help people stay in their home. For those who don't engage or who are unsustainable we must use every method available 
5) I am proud of ptsb and the best way of repaying the government is to build a good bank.


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## Brendan Burgess (28 Sep 2017)

Pearse Doherty  (It looks as if Michael McGrath is not at the Committee. )

*Tracker mortgage scandal *
Where is the bank at

JM: We have finished that review and are awaiting the findings of the CB

Pearse:  numbers

Ger Mitchell:
98% of original have been fully redressed. 2% we have been unable to contact <20.  98% have fully accepted the redress programme.
Just over 250 appeals - (Yes, we include them as fully redressed)

Pearse: Seriously: You are abusing stats.

Ger Mitchell:  18% have appealed , of which 27% have been successful.

Total 247 lodged appeals
67 upheld or partially upheld

Pearse: 579 others from October 2017 . Who are they?

Mitchell: Part of the Central Bank industry wide review

75% of the 579 are on the right rate - the others are in the process. 
Why are they not all: 1) timing of the review and 2) the variety of cases. 

Pearse: Why is it taking so long? It started 22 Dec 2015 . You don't have the capacity to sort out the guys from whom you took money. 
It's not just that you haven't given them back the money - you haven't put them on the right rate 

[A great performance from Pearse] 

There should be immediate restoration onto the right rate. 

When will all your customers be on the right rate
Mitchell: WE expect it will be done within the next 4 weeks. 

All customers will be remediated fully by the end of the year.


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## Brendan Burgess (28 Sep 2017)

*Pearse : *Can I welcome the residual write-off in the buy to let area.  How many do you expect?  Why is it not available to PDHs? 
Would you replicate what AIB has done with David Hall's IMHO? 

Shane: up to 1,000 buy to lets. We have written to 600 of them. The proposition allows the borrower to take 30 days to avail of the offer. The 30 days is not up, so we have few take ups so far. 

We have a different proposition for PDHs.  If they pay 20% of the shortfall, we are minded to write off the balance.  We are actively working with a preferred partner on MTR.  There could be 2,000 customers. In those cases we will write off the shortfall. 

We hope to have that in place by the end of the year. The preferred partner has to go through a process with the state agencies.


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## Brendan Burgess (28 Sep 2017)

*Paul Murphy 
*
What is the financial health of the bank like? 

Masding: Our mortgage share was 2% - it's now in double digits 

OUr NPLs is elevated at 28%. 

We had to deleverage under our restructuring our plan.  We got rid of good assets, so the proportion of our bad loans has increased. 

Of the  28% - 15% have been treated but are still NPL 
           13% - we need to move to resolution - BTL deleveraging, MTR, or voluntary sale. 

Cost of risk is coming down, but very high.  We have to manage the flow of defaults. 

We are operationally profitable and we are growing market share. 

Murphy:  How many mortgages have you sold? 

Masding: WE would have to come back to you with that number. Since the deleveraging restructuring plan, we haven't done any new ones. 
Groarke: Primarily Buy to Lets in the UK. 

Murphy: What happened the tenants 

Groarke: They were performing loans, so nothing would have happened the tenants.

Murphy: 787  is an increase of 90 on last year. ( I think of repossessions and voluntary sales of Buy to Lets) 

O'Sulivan: We appoint a Managing Agent. Where there are tenants in place, we abide by the lease and the RTb guidelines 
We sell the vacant properties - we don't want to deny people the opportunity to buy properties. 

Murphy: You abide by the lease, so you let the lease run out and let the tenant vacate?  You are making people homeless. 

O'Sullivan: Our obligation is to the borrower to obtain the open market value.  And not offering to FTBs or traderuppers would be wrong. In other words, we could not sell it with a tenant in place.  

Murphy: Once a property becomes vacant, how long does it remain vacant? 

O'sulivan: typically 6 months.  

In a repossession, it takes 18 months between exectuting the order and giving notice. 

Masding: WE are a bank, not a property company


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## Brendan Burgess (28 Sep 2017)

*Senator Conway Walsh (SF) 
*
Have you been contacted by the Gardai in relation to the tracker scandal? 

Masding: No

CW: Do you expect to pay tax or have you an arrangment like AIB

Masding: It's not an arrangement, it's the [tax law] 
Groarke: It's not unique to banking. Any company can carry its loss before 
It will cover the profits for the next 21 years. 
We also pay €27m levy 

CW: Many citizens would like this arrangement


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## Brendan Burgess (28 Sep 2017)

*Seán Sherlock 
*
Tracker issues 
Where customers complained to the FSO and the FSO rejected the complaint, that customer was to be contacted? 
Have you contacted all of them? 
I have a case where someone has not been contacted. So I don't know if you are correct. 

Ger Mitchell: EVery single tracker issued between 1/1/2004 and 31/12/2015 has been identified and reviewed.  All have been contacted or are in the process of being contacted.


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## Brendan Burgess (28 Sep 2017)

*Michael Mc Grath *[Great to see him.]
*
Mortgage rates *
1 in 3 has applied for the move from the SVR to the Managed Variable Rate.

51,000 customers are still paying 4.5% 

Masding: 45,000 would be a fairer figure for technical reasons.

McGrath: 45,000 customers who are paying 4.5% could get a reduction.  It applies to Negative equity as well?

Why is the uptake so poor?

Masding: We wrote to them in 2015 and 2016

Mitchell:  The range of reductions is from 0.2% to 0.8% depending on the LTV
We sent a free valuation voucher in 2015 and again in 2016. All they have to do is sign the form and send it back.

McGrath: Only 1/3 who are entitled to a reduction have applied. It's extraordinary and hard to understand.

In terms of new business rates: They get a discount  for the first year and 2% cash back.

You are not treating new and existing customers the same.

Masding: All businesses have obligations to attract new customers . We have to be very careful how

McGrath: The existing customers are paying for it. You have to come up with the money from somewhere.

Masding: It is based on what we see in other countries and what is happening in the market.

McGrath: What impact will the legislation have

Masding: I hope that there won't be rates control.

In terms of cash back, we do deep research.  our customers like the 2% .

The 2% rate has to be factored in when quoting APR.

McGrath
Fixed rates. A new customer can lock in for 3.4%.  An existing customer - there is no LTV banding.  Is that right. The only rate is 4.2%
So that is a very stark illustration of the different treatment of new and exisitng customers.

That is completely unfair.

Masding: Fixed rates are priced on the availability of funds.  I understand your point. We run the economics.

McGrath: I suggest you look at it.

I would advise your existing customers to switch to be honest. you are benefitting from the inertia of customers.

McGrath: Can a customer move to a lower LTV rate whenever they want.
Mitchell: No only once. But we are looking at that.

McGrath: Are you addressing the customers who are on 3.25%? 

Mitchell: one third of our customers were not on a price promise contract. Depending on the point of maturity, the rate would be determined at the date of maturity. That was all part of our submission to the CB on 30 June. 

McGrath: How could the margin be 3.25% over ECB. 

Mitchell: That was the margin at the time. 

McGrath: Were there customers being charged 3.25% at that time
Mitchell: Yes. 

McGrath: Has the CB adjudicated on that? 
Mitchell: We expect them to decide on all issues in October.


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## Brendan Burgess (28 Sep 2017)

*Senator Burke (Fine Gael?) 
*
How long does it take you to recover the 2% cash back? 

Groarke: We have to make assumptions 

Burke: How do you calculate APR? 

Groarke: It brings it down slightly 

Burke:


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## Wardy7 (28 Sep 2017)

Seriously losing hope


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## Brendan Burgess (28 Sep 2017)

John McGuinness

Asks about the High Court ruling on the split mortgage

Shane: It was a very specific case - not related to us.

we have 6,700 splits in place - 40% of all our cases.

But we are reviewing the High Court ruling

McGuinness
Have you written to your customers about it?

Shane: There was no need
This was a personal insolvency case and the judge decided that it was inappropriate in that case.

Masding: We review the splits every 3 years.  This is for our benefit and the benefit of the customers.

McGuinness
A point made by Deputy McGrath. A letter from my constituent: "My tracker was restored in August 2015. I am in the rate not specified category. Why am I paying 3.25%."

this is an unhappy customer of yours. one of many unhappy customers. Are you going to push them to push you to the limits.

Is your door open to listen to these customers?

*Ger Mitchell: Our door is always open. And it does not cost them to appeal or go to the Ombudsman.*


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## Brendan Burgess (28 Sep 2017)

*Pearse Doherty 
*
Just confirming 549 cases on top of the 2015 cases.

How many people have lost their homes? It was 22.

Have you given back any of the houses?

Ger Mitchell: There will be additional ones - maybe 5 to 10. We are completing the causation element of that. WEre our failings the cause.

Irrespective of any appeal, we have paid €50k for a home owner and €25k for a BTL.

The 22 , some have got back properties. Some have been given trackers to buy a new house.


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