Permanent TSB could pull about €900m in split mortgage deals from the an already politically charged €3.7bn loan sales plan.
However, the inclusion of the loans in the first place has come under fire from debt advocates and politicians.
PTSB said it awaits a decision from the ECB on whether it can reclassify €900m in split mortgage loans and indicated it would not go ahead with this part of the sale under a favourable ruling. The bank was unable to say when it would get a ruling from the regulator.
Paul Joyce, head of policy at Free Legal Aid Centres (Flac), said both PTSB and the Central Bank had questions to answer for allowing split mortgages to be bundled into an already controversial sales process.
The Central Bank promoted split mortgage deals as a way to deal with the country’s arrears crisis, and it was “extraordinary” that PTSB should be considering, or be allowed to include, such loans in the first place, Mr Joyce told the Irish Examiner.
He said it was an open question whether vulture funds were obliged under the regulator’s code of conduct on mortgage arrears to honour agreements on split mortgages.
Customers had accepted deals in good faith in lieu of their debts being written down, he said.
Flac believed banks’ troubled home loans of the Irish banks should be sold to a State-run ethical fund, he said.
Fianna Fáil finance spokesman Michael McGrath described the split mortgages sale plan as “the achilles heel” of the PTSB sales process.