Irish Life and permanent and PTSB – may be really in trouble

Irish Life and Permanent

Permanent TSB has a €35 billion residential mortgage loan book. Property prices have fallen to 50% from 2006/7 peak and are back at 2001 levels. 2009 impaired loans €828 million. Impaired loan book provision is 1.2% which is better than the 0.3% up to December 2008 but still ridiculous.

Non-performing loans – > €4 billion (up 59% in one year)
Bad debt provision was up to €477 million which is only 58% of the total
listed. This is less than 12% of the total non-performing loans of €4
billion.

Credit Unions have to set aside a provision of 20% default for all loans
that have to be renegotiated. ( Financial Regulator)

In Permanent TSB there are €10 billion of renegotiated loans which would require a set aside of €2 billion if the same criteria were applied as apply to Credit Unions and Quinn.

In the next two years, PTSB will need an extra €624 million over what they have provisioned already. Under IIRS accounting standards they should be made provide for this now.

ILP expended its loan book from €7.5 billion in 2000 to €40 billion by
2008. ILP has had to go to the ECB for €10 billion to fund its loan book to 25%. In 2009, the number of mortgages in arrears of 90 days or more rose from 3,700 to 7,200 —- 3.9% of the mortgage book. 22% of its Irish mortgage portfolio is in negative equity. €11 billion are tracker mortgages tied to the ECB rate and are losing money
at the moment.

If PTSB were to provision for 50% of non-performing loans it would have
lost €2 billion last year in banking. If the Financial Regulator was to demand 20% provision on all renegotiated loans then the losses last year would have been about €4 billion and the whole group would have been insolvent to €2 billion.
Ireland’s NAMA inclusive sovereign debt is about €150 billion and is worse than Greece per capita.