Full coverage: Vulture funds

Since the start of the pandemic, the US vulture fund has written down millions off the value of bad loans acquired from AIB in Northern Ireland – but reported no Covid-19 impact on its latest Irish-owned Spanish landlord business.

The US vulture fund had acquired many large portfolios of distressed loans in Ireland in the past, but never so many secured on people’s homes. Why did CarVal do it this time, and where does this leave borrowers?

Pandemic-hit debt collections have forced the US vulture fund to renegotiate some of its own loans with Morgan Stanley and Deutsche Bank. The worst cases to date have a common denominator: Ulster Bank.

Cerberus has been one of the most active vulture funds in Ireland since the financial crash. But with Covid impacting debt collections, a key Irish subsidiary has been deep in talks with Deutsch Bank over a debt extension.

The subsidiary of the US-based Encore Capital Group is just one of many investors increasingly using Ireland as a base to snap up distressed debt on the continent. But it has hit a speedbump in the rolling out of this plan.

The sale of an entire housing estate in Co Kildare did not happen by accident. It occurred because of policy choices that the Irish state made over the past eight years – choices that have changed the nature of home ownership and distorted the housing market.

Irish brass-plate companies have become a central plank in the structures used by vulture funds to swoop in on Mediterranean distressed debt. An investigation into Cerberus reveals how this extends to dealings in tens of thousands of foreclosed properties.

From 1,000 cases in 2019, High Court debt enforcement actions by banks and vulture funds fell to fewer than 200 last year. Who is still suing borrowers in the middle of a pandemic, who is not – and what is coming next?

Two months into her new job as European Commissioner for Financial Services, Mairéad McGuinness is facing into a potential wave of debt defaults. She wants to see a more sensitive response than the past wholesale offloading of non-performing loans to overseas vulture funds.

Faced with opposition questions on the latest tax-free profits reported by some debt vehicles, the finance minister defended the principle of securitisation. The real issues, however, are how useful it actually is, and how much of a tax advantage it enjoys.