Plan to shift loss-making trackers on talks agenda

MentalNote

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This would hopefully ease the burden on SVR customers. Could it have any impact on tracker customers?

The Irish Times - Friday, April 6, 2012
SIMON CARSWELL, Finance Correspondent
THE PLAN to move tracker mortgages out of AIB and Irish Life Permanent is aimed at making the lenders more valuable so the Government can start selling down its shareholding in the State-controlled banks, Minister for Finance Michael Noonan has said.
He confirmed that negotiations to change the annual payments on the State’s bailout bill for Anglo Irish Bank and Irish Nationwide also involved moving loss-making tracker mortgages out of AIB and Permanent TSB, he said.
In an interview with The Irish Times, Mr Noonan confirmed that moving the tracker mortgages was “on the table” as part of the plan.
“If we can improve the balance sheets of say AIB and Irish Life Permanent, we make it more malleable,” said the Minister.
“While one of the strategies to make the level of debt less onerous on the Irish taxpayer is changing the promissory notes, the second strategy is to enhance the value of the banks so we can take money out when we would sell equity.”
Excluding the €34.7 billion cost of Anglo and Irish Nationwide, which are being wound down, the Government has injected €29 billion into AIB, Bank of Ireland and Irish Life Permanent.
The State has a shareholding of more than 99 per cent at each of AIB and Irish Life and Permanent and 15 per cent of Bank of Ireland.
“I want us to realise that investment either during the lifetime of this Government or the next one so that we can get value for what we put in,” said the Minister.
He said he didn’t know how much the State could recover but was developing a strategy to maximise the amount to be recovered.
“Cleaning up the balance sheets in the banks through this set of talks would be very beneficial – it would enhance the value,” he said.
The Minister said that he had an agreement in Government that any money recovered from the selling down of the State’s interest in the banks would be used to reduce the State’s debt further and that this was “the second line of debt-reduction strategy”.
“If we got those two in place we would be getting into a position where our debt profile would be going significantly down and very manageable, with a growing economy to back it,” Mr Noonan said. The State authorities are considering moving about €34 billion of tracker mortgages from AIB and Permanent TSB to Irish Bank Resolution Corporation, the State-owned bank that is winding down Anglo and Irish Nationwide.
The side-stepping of a €3.1 billion cash payout by the State on this year’s instalment on the promissory notes with the issuing of a 13-year Government bond last week showed that the troika didn’t regard the terms of the notes as “untouchable”, said Mr Noonan.
“It shows that from the troika’s point of view, including the ECB, the terms of the promissory notes are not sacrosanct because if you can change it in one respect for one instalment, then it is open to change by negotiation,” he said.
The Minister added officials thought AIB could have done the deal with IBRC to swap the bond for €3.1 billion in cash, but the ECB wanted a bank outside State control to transact the swap deal.
Bank of Ireland has agreed to the cash-for-bond swap but the cash has temporarily come from the National Asset Management Agency pending the approval of Bank of Ireland shareholders.
Mr Noonan said he was ready to unveil the deal the previous week as ECB agreement was in place but an announcement was delayed so as to ensure Bank of Ireland shareholder rights were not infringed.Mr Noonan rejected a suggestion that a loan from the EU bailout fund as part of the planned bank restructuring could be seen as a second bailout of the State.
“I don’t see any of these things as a second bailout. I just think this is unfinished work from the first bailout,” said the Minister.
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Don't think the bank is going b charging svr customers any less , coz it has nothing to gain by so , of course some negotiation should be done with trackers to clear early, but probably won't
 
With the loss making trackers off the books, they'd surely lower the svr wouldn't they?
 
With the loss making trackers off the books, they'd surely lower the svr wouldn't they?

So at the very moment where you have the chance to finally setup your business more sustainable you then want to lower the SVR to immediately make your business unsustainable again?
Doesn't make any sense to me.
 
They don't have to lower the rates because:

They don't need to be competitive or try to keep customers loyal because nearly all of them are tied to them have no chance of changing that.
No other banks are offering transfers, the country is in negative equity and a lot of the SVR's are in arrears.
They have the SVR customer tied over a barrel big time.

Permanently Tied Struggling Borrowers
 
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Why help them so.... They can't just take take take..

If you read your mortgage contract, you will find several clauses that allow them to do what they like, whenever they like for as long as they like.

They may adjust the rate and write to you telling you so.
My favourite one is - Clause 12.4.17 (j) any other matters which PTSB considers appropriate.

Talk about a get out of jail free card or what?
 
newirishman said:
So at the very moment where you have the chance to finally setup your business more sustainable you then want to lower the SVR to immediately make your business unsustainable again?
Doesn't make any sense to me.
Reducing the SVR would reduce the potential profits, but that doesn't mean PTSB would reduce them to a loss making level, obviously. Also, uncompetitive rates are hardly the model of sustainable business in the longer term.
 
But will the government see sense? At the rate the banks are being amalgamated, it will be one bank left! Hardly competition?
Reducing rates might ease the suffering of the SVR customers but will they since Brendan pointed out in a key post somewhere that they are making money on those loan but losing a fortune on the trackers. Cut the trackers and maybe they have a chance?
 
I caught a quick glimpse of mondays indo and according to them the decision to come at the end of april on what was to happen with the bank will now be extended ( surprise surprise )

so any svr customers will be left in limbo . I only got a glance so i can't speak on the full article but anyone that can enlighten us on this article feel free
 
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