Permanent TSB has agreed to sell its non-performing loan portfolio for €1.3 billion.

Start Mortgages - an Irish-regulated affiliate of an American so-called vulture fund firm called Lone Star - has agreed to buy the loan book.

The controversial Project Glas portfolio includes 3,300 buy-to-let properties and 7,400 private homes.

According to the bank, the average amount of arrears on the loans in the portfolio is €28,800, while the average time the loans have been in arrears is 3.5 years

PTSB CEO Jeremy Masding described it as a "very positive development" for the bank.

He said: "We will shortly be writing to account holders whose loans are in the portfolio to inform them that their loans are being transferred.

"Very importantly, [we will] remind them that in Ireland, when a loan is sold from one institution to another, the protections which are in place with the selling institution travel with the loan to the new owners."

Reaction

Responding to the news, Leo Varadkar said the Government's concern when it comes to the sale of loan books is to make sure people who are making a 'genuine effort' to pay their mortgage aren't adversely affected.

He added: "Legislation that is coming in in the next session will make sure that vulture funds - or investment funds, whatever you want to call them - are regulated much more so than they are now."

Fianna Fáil, meanwhile, accused Permanent TSB of 'taking the easy way out' with the portfolio sale.

The party's finance spokesperson Michael McGrath said: "While it is a positive at least that Start Mortgages is a regulated entity, there will be understandable concern among affected borrowers given its background as a sub-prime lender and the fact that it is owned by giant US vulture fund Lone Star.

"A key question is whether Start Mortgages will now offer a wide suite of restructuring solutions to borrowers in arrears."