Tuesday 23 January 2018

IL&P in market to raise €900m by year end

Chairman frustrated with delays over consolidation moves due to NAMA and EU

Joe Brennan

IRISH Life & Permanent (IL&P) chief executive Kevin Murphy said he may seek to raise €900m from shareholders by the end of the year, before pushing the group's weak banking unit into an industry merger.

However, his chairman Gillian Bowler told shareholders at the bancassurer's annual general meeting yesterday that it was "frustrating" how long it was taking for consolidation to kickstart, as rivals were preoccupied with the National Asset Management Agency (NAMA) and EU restructuring plans.

IL&P stands alone among the state-guaranteed lenders in not participating in NAMA or requiring a bailout. "Our best guess is that it's going to be late summer or autumn before things move on. I do know we'll play a key role in what emerges," she said.

Speaking on the sidelines of the meeting, Mr Murphy said: "We are in contact with all the (guaranteed) institutions and some of them have already given us opportunities."

BoI divisions

He said he would "clearly have a look at" the three key divisions which Bank of Ireland is being required to sell by Brussels.

BoI recently flagged that it would have to sell its New Ireland life and pensions arm, Bank of Ireland Asset Management (BIAM), and its ICS Building Society by 2014. Mr Murphy signalled his particular interested in the ICS unit, which has €4bn of deposits and where BoI is required to sell at least €2bn of the €7bn mortgage book.

IL&P is also having "conversations with EBS and Irish Nationwide about how their viability plans are going", he said.

The Financial Regulator has carried out thorough assessments of the capital requirements of Allied Irish Banks, Bank of Ireland and EBS on both likely and stress-test scenarios over the next three years, in order to determine how much equity they need to raise.

Mr Murphy said Permanent TSB was unlikely to be subjected to the so-called Prudential Capital Assessment Review until it is heading into a deal. In the meantime, the bank is cushioned by the group's 9.2pc tier-one capital ratio.

Meanwhile, Mr Murphy said that the group's large securitisation deal on part of its life assurance book, which is set to release €200m of capital, has still not been sanctioned by the Financial Regulator.


He said that regulators on both sides of the Irish Sea had not concluded how to handle securitisation of life assurance books in the current environment.

The group said in a trading statement that it had issued €4.8bn of term debt in the market, making up 75pc of what it needed to raise for the year as a whole. Its reliance on European Central Bank funding has also dipped back to €8bn from €9.75bn at the end of December.

Among the guaranteed institutions, Permanent TSB has been the most reliant on the wholesale markets for funding.

Its loans-to-deposits ratio peaked at more than 300pc last year, but has since fallen back to 246pc, according to Ms Bowler, adding that the group's aim was to bring it down to 150pc over time.

Finance director David McCarthy said the group expected to go to the market with another €1bn bond over the next six weeks, subject to market conditions.

Irish Independent

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