herald

Wednesday 15 August 2018

Banking woes blamed on loss-making trackers

Plans to 'park' tracker loans

IRELAND'S banking woes are being hampered by the problem of loss-making tracker mortgages, deputy finance minister Brian Hayes (below) said.

Tracker mortgages now make up more than 50pc of Irish banks' residential property loans.

While the majority of these debts have remained sound, they are ultimately not earning profits for the lenders.

This is because the high funding costs do not match with the low ECB rate that the products track.

The Government is considering plans to shift the loans from some of its banks, possibly to an off-balance-sheet vehicle, Mr Hayes said.

"Until the issue of the tracker mortgages, right the way across the Irish banking sector, is resolved we are not going to make the kind of progress that we need," he said.

"Whether or not a new vehicle is to be established that would park the trackers so that banks could get on with other business, that is an issue that they are now currently looking at."

The Government holds majority stakes in Allied Irish Banks and Permanent tsb and a minority stake in Bank of Ireland.

But Mr Hayes did not specify that the Government was looking at any particular lender.

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