Taxpayers' stake in Ptsb may be cut to smooth IPO
Published 15/04/2015 | 02:30
Taxpayers' stake in Permanent TSB may be cut below 75pc to smooth the first major stock listing of an Irish bank since the financial crisis.
The bank said yesterday that it will issue new shares to raise cash to repay €400m of so-called contingent convertible capital, a high cost loan that is owed to taxpayers.
The Government's stake will automatically fall when new shares are issued and the bank said it may ask the State to sell additional shares to meet stock market requirements that at least 25pc of a company's stock is freely available to trade on the markets.
If €400m is raised from selling a 25pc stake, it would value the entire bank at €1.6bn.
If the €400m target can be hit from a sale of less than 25pc of the bank, the calculations would change accordingly.
Sources close to the deal said the Government controlled stake in the bank could be reduced to 75pc or even 70pc as the rescued lender is refloated on the Dublin and London Stock Exchanges.
Cash raised by the State will be used to repay International Monetary Fund (IMF) loans.
Permanent TSB will also issue €125m of new debt, in the form of relatively high risk bonds that would convert automatically into shares if the bank ran into financial difficulties.
That cash is to meet European regulatory targets, and will be kept by the bank.
Last year Permanent TSB was the only Irish lender to fail Europe-wide stress tests. Since then it has slashed its stock of so-called non-performing assets, accounting for 41pc of all European loan sales in the first quarter of this year. The share issue and the bond sale are expected to complete over the next four weeks.
The bank's stock is currently listed on the junior stock market. Those shares fell more than 15pc yesterday to 5.313 cents each, implying a value for the entire bank of almost €2bn.
In a trading update, PTSB said business conditions had continued to improve in the first quarter with fewer new defaults compared to last year.