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PTSB in talks to join guaranteed SBCI loan scheme

On eve of announcing results, bank said to be in advanced discussions to create fund for small firms

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PTSB’s CEO Eamonn Crowley has spoken previously of targeting a push into the SME market

PTSB’s CEO Eamonn Crowley has spoken previously of targeting a push into the SME market

PTSB’s CEO Eamonn Crowley has spoken previously of targeting a push into the SME market

Majority State-owned lender Permanent TSB (PTSB) is in advanced talks with the Strategic Banking Corporation of Ireland (SBCI) to create a new loan fund for small businesses.

It is understood the talks are focused on PTSB gaining access to SBCI's Future Growth Loan Scheme, which funds capital expenditure and business investment through low-cost seven- to 10-year loans, secured with an 80pc guarantee from the European Union. The guarantee means the cost of credit is cheaper for businesses.

Loans available under that scheme can range from €25,000 to €3m. Tánaiste and Business Minister Leo Varadkar last week announced the expansion of the SBCI scheme from €300m to €500m.

AIB, Bank of Ireland and Ulster Bank already manage applications from borrowers to the fund and SBCI had said it was in talks with three more lenders - understood to include PTSB.

The bank, which is due to announce financial results tomorrow, declined to comment yesterday.

However, new PTSB CEO Eamonn Crowley has already said he is targeting a push into the SME market, focused on smaller owner enterprises.

He told journalists when he was appointed CEO in June that the SME market was under-served, and said he had a particular eye on deepening relationships with mortgage customers who also own their own business.

PTSB more than doubled its SME lending book last year, from €21m to €47m, but it remains a minor player in the sector where its stated ambition is to increase lending to around a quarter of a billion by 2023.

PTSB is due to announce financial results for the first half of the year tomorrow, when the focus will be on the impact of the Covid-19 pandemic.

Analysts at Davy have forecast the bank to announce a loss after tax of €26m for the first six months of this year, largely a result of impairment charges that will be based on the bank's estimates of the likely losses that will result from the pandemic, including an anticipated increase in bad loans. Around 10,000 of the bank's customers have availed of Covid-related payment breaks during the period, mainly mortgage customers.

PTSB will be the first of the three State-backed banks to announce results this year, followed by Bank of Ireland on Wednesday and AIB on Thursday. The three banks in which taxpayers still hold significant stakes will write off a combined €2bn as a result of the Covid-19 outbreak, analysts have warned.

Davy has estimated combined losses at the three banks will hit more than €580m in the first half of this year.

Ulster Bank last week reported an operating loss of €276m for the six months to June.

The scale of likely losses, expected to continue into the second half of the year, is the worst hit to the banks since the global financial crisis.

Irish Independent