Saturday 22 July 2017

Loss-making lender to get extra €250m from State

Joe Brennan

The State is poised to inject a further €250m into EBS as early as today to buoy its capital reserves ahead of a July 2 deadline for offers for the building society, according to sources.

Loss-making EBS received an initial €100m bailout late last month, and the Government committed to providing a further €775m needed -- by way of promissory notes, or IOUs -- to reach new regulatory capital targets.

The society, led by chief executive Fergus Murphy, was in talks with a private equity consortium, led by Dublin-based Cardinal Asset Management and backed by US buyout firm JC Flowers, since late March.

Talks

But it was forced by the European Commission last week to open up the process to other parties. Irish Life & Permanent (IL&P) is understood to have started talks with EBS.

In the event that Cardinal wins the hand of EBS, it is envisaged that the State will be able to claw back some, or all, of the money pumped into the society.

But analysts believe IL&P is more likely to pitch a merger between EBS and its banking arm, Permanent TSB, before going on to pitch a tie-up with Irish Nationwide Building Society -- to create a so-called 'Third Force' in Irish banking.

IL&P chief executive Kevin Murphy has expressed an interest in taking over €2bn of home loans and a €4bn deposit book belonging to ICS Building Society, which Bank of Ireland is required to sell by the EU under its state-aid restructuring plan.

IL&P would ultimately hope to own less than 50pc of the new entity, allowing it to deconsolidate it from the broader bancassurance group.

Any of the tie-up combinations would result in an institution with a lower loan-to- deposit ratio than Permanent TSB's 246pc, which stands as the highest among state-guaranteed lenders.

Irish Independent

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