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Finance calls for ‘urgent’ ECB views on vulture fund bill

Department warns law will ‘significantly reduce’ value of State’s bank shares


ECB headquarters in Frankfurt
ECB headquarters in Frankfurt

The Department of Finance has called for “urgent” consultation with the European Central Bank (ECB) in relation to proposed legislation that would prevent banks from selling loans to so-called vulture funds.

The ‘No Consent, No Sale 2019’ bill, which has already been passed by the Dáil, has faced fierce criticisms from both the Central Bank of Ireland and the department.

In a submission, seen by the Sunday Independent, the department warned that if the bill, which was proposed by Sinn Féin finance spokesman Pearse Doherty, was made law it would also “significantly reduce the value of the State’s shareholding in the banks”.

The proposed legislation prevents banks from selling loans to third parties without the consent of the borrower. The bill is now being evaluated by the Oireachtas Finance Committee.

“It is for the committee to seek the opinion of the ECB on the bill,” the department wrote in the submission to the committee.

“Both the Central Bank of Ireland and the department are strongly of the view that it will be necessary to consult the ECB and possibly the Single Resolution Board as a matter of urgency.”

The 22-page document also stated the bill was likely to result in higher mortgage interest rates for customers, particularly those availing of variable rates.

The department said that the proposal would reduce the availability of mortgage lending overall and increase the level of repossessions by banks.

“This would introduce a statutory obligation on the lender to seek permission from the borrower before a loan is sold when it relates to residential property,” the submission read.

“This would essentially eliminate the market for loan sales in Ireland. The bill is disproportionate and likely unconstitutional.”

The department has previously flagged some concerns about the bill at a committee meeting but stepped up the level of concern in its submission.

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The department also argued that both it and the Central Bank would need to hire additional staff to monitor the impact of the bill.

Earlier in the month, Doherty defended his bill, insisting that it was not unconstitutional. He stated that there was a difference between a fund and a bank in that funds wanted to “just maximise their profits and get out of here”. Doherty said the bill would not mean a borrower can not pay and expect to stay in their home.

Sunday Indo Business

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