Permanent TSB to close 20 branches with loss of 200 jobs
LOSS-making Permanent TSB is to close at least 20 branches, lay off between 150 and 200 people and split into a good bank/bad bank.
The bank is also planning to further reduce its deposit interest rates, and rather than cutting its high standard variable rate may actually have to raise it if its funding costs go up again.
And chief executive Jeremy Masding said there would be no general policy of debt forgiveness for mortgage borrowers who are deeply in arrears and are forced to hand their homes back to the bank.
Mr Masding told the Oireachtas Finance Committee the bank would unveil details of its restructuring plan next week.
He did not give details to the TDs and senators yesterday, but it is understood that up to 200 of the existing 1,800 staff would be laid off.
The restructuring plans involves splitting the lender into a good bank of around €14bn in loans, and a bad bank, or asset management unit, with €12.5bn in loans to be run down, sold or moved to another institution.
Loss-making trackers held by both residential and buy-to-let customers and some of the variable rates that are in arrears would likely go into the bad bank.
Mr Masding told the committee: "We will significantly reduce the number of branches -- from 92 at present." Earlier this week the Irish Independent reported that up to 25 branches at the bank were due to close, out of a total of 200 across all banks.
The bank boss came in for heavy criticism from TDs Michael McGrath of Fianna Fail, and Independent Stephen Donnelly, who accused the bank of "gouging" its variable rate customers.
Mr McGrath said the high variable rates for residential customers, even higher ones for investors, and fixed rates of close to 9pc were counter- productive as they were forcing people into arrears.
He said 22pc of residential customers were in some form of arrears, with 14pc three months or more in arrears. A third of buy-to-let investors were behind on their payments, with 25pc 90 days or more in arrears.
Mr Masding said the bank had already cut its residential variable rate by 0.85pc since April and may be able to cut it again if its funding costs drop. However, if funding costs go up then the variable rate will have to rise.
He said deposit rates, which make up part of its funding costs, were so high they were "irrational". Cuts on a whole slew of deposits at the bank of up to 0.5pc took effect on Tuesday.
Mr Masding added: "There is not and will not be any general policy of debt forgiveness. To do otherwise would be to invite further catastrophe on the taxpayer."
But the bank would look at debt settlement deals for people who genuinely can't meet repayments, especially when the house had been handed back to the bank.