Irish bank Permanent TSB has announced that it is selling 1,932 home loans that have fallen into arrears to Start Mortgages. Star Mortgages are part of US vulture fund Lone Star. The deal is thought to be worth €264 million, slightly more than half the €506 million that the borrowers owe.

Permanent TSB Chief Executive, Jeremy Masding, said Irish Central Bank consumer codes and regulations would continue to protect the borrowers after the loans were sold. The lender also pointed out that Start and Lone Star would have to honour any existing repayment arrangements agreed with borrowers whose loans they are buying.

A spokesman said that the bank held a process that originally involved several bidders. The deal cuts the proportion of bad loans on Permanent TSB’s books to 7 percent from 10 percent.