Permanent TSB tells EC it's on track to make profit by 2014
Published 30/08/2011 | 05:00
BAILED-out Permanent TSB is on track to turn a profit by 2014, the Government has told the European Commission.
The claim was made in a restructuring plan sent to Brussels at the end of July, around the same time as the bank got €2.8bn of state support.
Speculation about Permanent TSB's future has been rife since the Government decided to make AIB and Bank of Ireland 'pillars' and fold EBS into AIB.
Sources this week confirmed, however, that the restructuring plan submitted to the EC foresees Permanent TSB remaining as a standalone bank.
With a heavy bias towards unprofitable tracker loans, Permanent TSB's €37.5bn loan book is expected to suffer about €800m a year in impairments from 2011 to 2013.
The bank's management believe they can bring it back to profit by 2014, and also expect to have normalised their funding situation by that time.
The bank's funding position will be helped by asset sales including the disposal of a £6.5bn mortgage book in the UK held through Capital Home Loans (CHL).
The Irish Independent understands that KPMG has been appointed to handle the sale and that interest has been "healthy".
As many as six bidders, including Northern Rock, are believed to have run their eyes over CHL's books in recent weeks.
The business has to be sold by 2013, but is likely to be sold well ahead of that deadline.
The update on Permanent TSB's position comes as parent company Irish Life & Permanent (IL&P) prepares to release half-year results tomorrow.
The figures themselves are likely to be overshadowed by any update on the sale of the plc's core business Irish Life Assurance (ILA).
IL&P is being forced to sell off ILA as part of a package imposed after last March's stress tests showed the bancassurer needed €4bn of extra capital to deal with potential future losses.
Up to €1.2bn of this is expected to be raised through the sale of ILA and through 'burden-sharing' with IL&P's junior bondholders.