Sunday 22 July 2018

Permanent TSB blames 'misinterpretation' of rules for liquidity breach that led to €2.5m fine

Jeremey Masding, CEO of Permanent TSB
Jeremey Masding, CEO of Permanent TSB

Gretchen Friemann

Permanent TSB has blamed its "misinterpretation" of the rules for a liquidity breach that resulted in a €2.5m fine.

The ECB today hit the state-backed lender with the penalty for failing to hold a sufficient reserve of safe, highly-liquid assets that can be cashed in during a crisis.

It was the calculation of this requirement, known as the liquidity coverage ratio, that triggered the fine.

But in a statement the bank insisted that at no time had its "actual liquidity position" deteriorated and pointed out it had "self-identified and reported the issue to the ECB and co-operated fully with the ECB on the matter."

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The bank said the problem arose during October 2015 and April 2016 and stressed that since then it has been fully compliant. A spokesperson for the lender said the bank had a liquidity buffer of about €4bn during the time of the breach while the current reserves stand at €6.5bn.

In a statement the ECB also noted that “this breach did not change the liquidity position of Permanent TSB Group Holdings Plc" and said the group had "fully remediated the issue”.

Yet the fine comes after a difficult period for the bank, which was downgraded by Davy's and Investec after its latest set of results showed little momentum on a ballooning portfolio of non-performing loans. PTSB's soured debts account for 28pc of its total book - the highest among the Irish lenders.

More than half of the bank's €5.78bn of  NPLs are performing or are in some form of forbearance treatment.

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