The regular audience on here will be aware of the prediction that Permanent TSB, the 99.5% state-owned bank, will run out of cash by April 2013 when it needs redeem significant bonds UNLESS the bank can dispose of assets beforehand or it gets an additional bailout. Yesterday, PTSB issued a statement to the stock exchange confirming that it has sold €351m of loans (net of provisions and write-offs at February 2012) for a total of €287m. This means that PTSB will need book a further loss in its books of €64m, and may arouse suspicion that the price is a fire sale price forced on PTSB by its imminent obligations to redeem significant bonds in January and April 2013.
The buyers of the loans are identified in the PTSB release as a SPV called “Consumer Auto Receivables Finance Limited” and a “global bank”. It is understood that Deutsche Bank is behind both, and industry insiders have raised eyebrows at the involvement of Deutsche Bank is these loans, the majority of which are understood to be car finance loans, because car finance is not an area in which Deutsche Bank specializes.
In addition, there has been a management buy-out of a PTSB unit, Permanent TSB Finance Limited. The management set up a new company called “First Citizen Finance Limited” and all staff in the PTSB unit are expected to transfer to the new company. The new company is contracted by the buyer of the loans to service the loans. “Management buy-out” might be a grandiose term for this transaction as PTSB has said the sale was for “a nominal consideration”.The unit which was bought out by management made a €16m loss in 2011, according to the statement, but it is unclear if that includes loan impairments and the operating profit of the businesses was not disclosed.
So, did a bank into which we have to date shoveled €4bn and which we own 99.5% execute a financially stupid transaction? Was the sale price for the loans of €287m a “fire sale price” forced on the company by the need to repay bonds in January and April 2013. And was selling a unit to management for “a nominal sum” a good deal for PTSB? Davy Corporate Finance again advised PTSB and how much did they get paid on the transaction? How were the portfolios marketed so as to maximize value? Can we expect Deutsche Bank, which doesn’t specialize in car finance, to flip the assets and make a quick windfall profit?
Given that Minister Noonan keeps on telling us the details of these transactions in banks which we practically own are commercially sensitive, who knows, who can tell.
It appears PTSB Finance Ltd may have shot themselves in the foot big time on this one!
While there is no block on institutions selling or assigning loans, if one has a car loan with PTSBF and it has been sold the original contract has been altered! In a Court how can PTSBF claim to be the entity in Standing if they have been paid!, presuming one can get over the last point, how would PTSBF manage to claim for anymore than the difference between the discounted sale price of the loan and the original balance outstanding? Anybody!
If one has a car loan which has not been sold, it then has been transferred to the new “First Citizen Finance Ltd” (what a stupid name) then again the Original Contract has been altered, In a Court how can First Citizen Finance Ltd claim to be the entity in Standing if they are not a Party to the Original Contract? Anybody!
Many more questions will follow…. but not today
Peace
@AL, when I first saw your comment, I thought “in your dreams”, that if a lender assigns your loans, your position doesn’t change but it seems that the book value of the loans sold yesterday might have been over €600m – €500m of car loans and €120m of agri loans.
http://www.irishtimes.com/newspaper/finance/2011/1202/1224308469128.html
So it would seem the written down value in PTSB’s books was €351m or 57c in the euro and the sale price of €287m would be 46c in the euro. So borrowers might, on the face of it, try negotiating a deal with the new lender.
Industry insiders opine that the new buyer of the loans won’t hold onto them for very long.
“Industry insiders opine that the new buyer of the loans won’t hold onto them for very long.”
This is akin to loans when they are sold on to collection agencies, it is gamble on the part of the purchaser, they may get paid and they may not. I believe they would have an uphill struggle in court to prove they have any standing in the original contract, Contract Law is clear that a party may not insert itself into a contract without the express consent of all existing parties, i.e. there must be a meeting of the minds, also the original second party has vacated the contract by monetizing their interest albeit for a reduced return, this is their perogative (cutting your losses) but it does not contractually legalise the standing of the purchaser of the loans, again this is a speculative gamble but nomally backed up by bad debt insurance. IMHO
[...] on Householders opting to have power cut off Fresh hope for those struggling on 100pc mortgages PTSB makes €64m loss on disposal of loan portfolios Supplementary budget for health sector likely Just what would we do if UK left EU? Euro lifted [...]
Is the management buyout similar to Certus/BOSI deal?
Ireland is now being scavenged by vultures of all kinds. I am not a bit surprised to see Deutsche Bank plucking the Irish carcass. After all they were one of big EZ banks whose bonds were paid by the Irish taxpayer at ECB and German insistence.
Now there in again, with the sole purpose of identifying potential customers for the German car manufacturers, who at the moment have their own bank subsidiaries active in the market as never before,.
Ultimately, Deutsche’s interest here is in support of German car manufacturing jobs and as a banking predator.
Neither Deutsche nor Germany do charity.
hi,what would be the postion of having a mortage judgement against you for a comm jeep with permanent tsb which cost 18k and the sold for 5.4k and judgement for 12k and now sold to auto receivables to be “serviced” by first citizen ,how does a legal lean on a famliy home get pass around without it being compromised