By Eamon Quinn, Business Editor
Legislators will significantly increase their oversight of bankers’ plans to sell buy-to-let loans (BTL) as part of a wider legislative push to protect tenants from homelessness when their properties are sold by banks to vulture funds, Fianna Fáil finance spokesperson Michael McGrath (pictured) has said.
The pledge represents a new front to protect renters by opposition TDs after Fianna Fáil in recent weeks advanced plans to extend consumer protections to home-owning mortgage borrowers whose mortgages are sold by lenders to vulture funds.
And Mr McGrath said new legislative plans would go beyond current plans and will involve other Government departments to strengthen tenants’ rights and therefore prevent bank sales of mortgage loans of landlord mortgages adding to the housing crisis.
Signalling to the banks they are on notice over BTL loan sales, Mr McGrath said: “Financial regulation will cover all loans and that is one aspect of it. The second area applies to tenants and falls under different Government departments but there is also a policy response required there. My overall message is that the banks should not be left with the impression that it is perfectly acceptable to sell on SME loans and buy-to-let loans and that the political system does not care. We do care. And we remain of the view that they should be working through their loans books and that includes buy-to-let, farming loans, and small business loans”.
The focus on tenancy rights and protections will involve “a very important focus of policy at this time given the housing crisis”.
Mr McGrath said a plan called Project Redwood for the sale of a group of non-performing loans by the 71%-Government owned AIB appears to be an early stage but that the Oireachtas would be keeping a close eye nonetheless.
Presenting its full-year earnings, AIB ruled out selling on troubled mortgages on so-called principal dwelling home, or PDH, and said its BTL or landlord distressed loans stood at “a much more modest” level of less than €1bn.
Chief executive Bernard Byrne told reporters the bank had worked through over 70,000 loans on a case-by-case basis and that an improving economy and mortgage-to-rent schemes were helping the bank in the process.
Asked whether he was concerned about potential regulatory scrutiny on any sale of BTL loans, Mr Byrne said that whatever emerges from any Oireachtas process that the principle of secured lending must be maintained because that, he said, was key to setting mortgage interest rates.
AIB increased its provisions to €230m from €190m to account for its part in the industry-wide €1bn tracker mortgage scandal. The bill had increased because the estimate of its costs was made in 2015, Mr Byrne said.
Announcing it would pay €326m to shareholders, AIB said it aimed to increase its level of payout by 2020. The bank was so far “hitting all our marks” to get to that stage, it said.
Profit before exceptional items rose to over €1.57bn in 2017 from around €1.47bn in 2016, and pre-tax profits fell to just over €1.3bn from around €1.68bn.
Its shares fell over 2% at one stage, valuing the lender at almost €14.36bn.
Mr Byrne said it was up to the Government to decide on the timing of selling more shares in the bank, but said markets had performed well despite the recent turbulence and that investors’ appetite had been whetted because of the strong growth in the Irish economy.