Business Irish

Thursday 18 January 2018

EU clears recsue plan for bailed-out Permanent TSB

Permanent TSB boss Jeremy Masding
Permanent TSB boss Jeremy Masding
Donal O'Donovan

Donal O'Donovan

No further tax payer bailouts will be needed for Permanent TSB (PTSB), according to European competition authorities

A restructure plan for the bailed-out lender was formally approved by the European Commission yesterday.

It said the plan provides a basis for the nationalised lender to return to viability.

The approval includes a set of commitments by the bank that run until the end of 2018.

"PTSB will continue to de-leverage and reduce costs and will not be able to carry out acquisitions in this period. Moreover, PTSB will take certain actions to facilitate the market entry of competitors," the Commission said in a statement.

Management at the bank welcomed the approval yesterday.

Timing of the news is a boost to bank management who are currently on the road seeking to raise €525m from investors.

Around €400m of that money is earmarked to be returned to taxpayers in a first repayment of part of the bank's €2.7bn bailout.

The rest of the cash is being raised to meet a target set by regulator following last year's bank stress tests.

But specific committemts, including to increase lending margins and potentially to sell some tracker loans, are likely to be controversial.

Yesterday, competition authorities in Brussels said support granted to the bank by taxpayers is in line with EU State Aid rules.

Formal endorsement of the bank's plan to return to viability follows approval in principal which was granted in March.

According to the European Commission, the restructuring plan set out the path for PTSB can see bank can return to viability without further State support, while ensuring it - and its owners - contribute to the cost of restructuring without distortions competition in the market. Permanent TSB is the last of Ireland's bailed-out banks to win EU approval for its restructuring plan.

While the plans are drawn up by banks' managers it is the Department of Finance, on behalf of the State, that actually seeks approval.

Bank restructurings needed to be endorsed because taxpayer funds were used to finance the bailouts, something seen as potentially anti-competitive and possibly breaching State Aid rules.

"Today, we close the book on open restructuring cases of banks in Ireland by approving the state aid to PTSB. The restructuring plan sets out a clear path for the bank's long-term viability without further state support," Commissioner Margrethe Vestager said.

Under the approved terms PTSB must sell its €6.5bn UK Capital Home Loans book of mortgages and €1.67bn of distress Irish property loans.

Terms attached to the EU approval will remain in place until the end of 2018.

They include limits on where the bank can grow, and by how much, as well as a commitment by the bank not to "deviate materially from its current activities," by moving into new types of activity.

Irish Independent

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