Hi Der Kaiser
Interesting points.
The tracker book will be unprofitable for some time.
So PTSB will be a loss making institution for some time.
It will impose some of the losses on the only available target - The SVR mortgage holders.
It won't be attractive to depositors as its future is uncertain.
It won't be able to provide new mortgages as its loans to deposits ratio is so high.
So the thinking is...
Transfer the book at fair value to some other state-owned institution.
The bank will replace mortgages with cash thus reducing their loans to deposits ratio.
PTSB is well capitalised, so it can take the loss without needing to make further provisions.
New PTSB will be profitable.
Pressure will be off it to exploit SVR customers.
It can rebuild its brand and may be sellable.
Go through a costly admin, legal & accounting exercise of shifting things around the banace sheet
This is a very interesting point. They should just quickly agree a figure without paying a fortune to consultants for valuations etc. PTSB's loss will be the other state owned body's gain. The fortune lost on transferring Anglo's and Nationwide's book to another state owned entity was a disgrace.
However, before all this happens, they should announce a generous 25% credit for anyone who comes off their tracker or pays it off early. That would benefit the customer and save a lot of admin work.
Brendan