Saturday 21 July 2018

Irish Life may seek to raise €900m in capital

Irish Life & Permanent Chief Executive Officer Kevin Murphy
Irish Life & Permanent Chief Executive Officer Kevin Murphy

Dara Doyle and Louisa Fahy

Irish Life & Permanent may seek to raise money by the end of the year if it decides to split its banking and life insurance units.

The company would need to raise €900m, Chief Executive Officer Kevin Murphy said today.

The European Commission is reviewing plans submitted by Irish banks after the government bailed them out as the financial system came close to collapse amid surging bad debts and a credit freeze. Irish Life this year created a new holding company that would allow it to split, and Murphy said he’s “confident” the Irish bank industry will be restructured.

“We are ready to participate in that,” he said.

Like rivals Bank of Ireland and Allied Irish Banks, mortgage arrears at Irish Life increased after the economy shrank and real-estate prices fell by half from their peak in early 2007. Irish Life hasn’t received any government money since the start of the financial crisis and isn’t taking part in NAMA.

Irish Life said the economy may have started to emerge from recession. While arrears rose by about 19pc in the first four months of the year, the number of customers less than 90 days behind in payments leveled off in the period, “which may indicate that they are nearing the peak,” the company said.

“The loan losses are crucial, as they help determine the level of capital needed,” said Sebastian Orsi, an analyst at Merrion Capital in Dublin, who has a buy rating on the company. “The arrears numbers are encouraging, albeit tentatively.”

Irish Life fell 5 cents, or 2 percent, to €2.50 at 11:20am in Dublin trading. The stock has dropped 24pc this year, reducing its market value to €676m.


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