DUBLIN (Reuters) - Irish bank permanent tsb (PTSB) (I:IL0A) said on Tuesday it had agreed to sell a portfolio of non-performing loans to Lone Star Fund's Start Mortgages for 1.3 billion euros (1.16 billion pounds), reducing its overall non-performing loans ratio to around 16 percent from 25 percent.
The portfolio, known as Project Glas, comprises loans linked to around 10,700 properties, of which around 3,300 are buy-to-let properties and around 7,400 are private dwellings.
"Reducing NPLs is a necessary step for us to take to complete the rebuilding of PTSB as a viable, competitive lender," Jeremy Masding, Chief Executive of PTSB, Ireland's third-largest bank, said in a statement.
The gross balance sheet value of the loans is around 2.1 billion euros.
The disposal will boost PTSB's common equity tier 1 ratio by 2 percent. The average arrears time in the portfolio is 3.5 years and the average arrears value is 28,800 euros.
PTSB had planned to sell loans with a balance sheet value of around 3.7 billion euros but conceded to political pressure earlier this year to remove 4,300 split loans -- soured loans that are restructured by putting repayments on part of a loan on ice until a future date -- from the portfolio.
Masding sought to reassure homeowners subject to the sale that the protections that currently exist transfer with a loan when it is sold.
"Customers will continue to be afforded the protection of existing regulatory protections after the transfer", he said.
Irish banks are under pressure from the European Central Bank to reduce bad loans which ballooned after Ireland's property crash. PTSB is 75 percent state-owned.