THE FUTURE of Permanent TSB (PTSB) and its mortgage rates came under close scrutiny at an Oireachtas hearing yesterday.

Chief executive Jeremy Masding told the Oireachtas Finance Committee that restructuring would lead to a significant number of branch closures and redundancies and that he would provide more details next week.

The bank was accused of “gouging” customers with interest rates which were causing “extraordinary distress” to thousands of Irish families. The relationship between its standard variable rates (SVRs) and the fact more than 20 per cent of its customers were in arrears was highlighted.

PTSB, which is 99.2 per cent owned by the State, gave the committee an update on the effect of the 0.85 percentage point reduction in its SVRs since May.

Mr Masding defended the bank’s interest rates and pointed out it had lowered them for variable rate customers twice since the end of April, “even as other banks have declined to pass cuts on”. He said the successive rate cuts had “significantly improved our position, and we have ended our outlier status in the market”.

Independent TD Stephen Donnelly said despite the two rate cuts the bank still offered the second most expensive SVRs in the Irish market.

He said over recent years PTSB had passed on just one third of the rate cuts announced by the European Central Bank and reminded Mr Masding his bank’s SVR was more than 1 percentage point higher than AIB’s.

PTSB had been engaged in “straightforward rent gouging, which has caused extraordinary distress for families”, Mr Donnelly said. He pressed Mr Masding on the bank’s treatment of customers unable to manage mortgage repayments and said while PTSB’s acceptance of some responsibility for the financial crisis was welcome, its refusal to countenance a widespread debt forgiveness policy was “hypocritical”.

Mr Masding said such a policy would be a “catastrophe” for Irish taxpayers. He said a portion of a borrower’s debt could be written off after a negotiation process.

Mr Masding said distressed mortgage holders in arrears would be dealt with on a case-by-case basis but warned that if the bank believed a mortgage holder had the capacity to repay a portion of a debt even after a house had been surrendered or sold, it would pursue that customer.