S&P cuts 'less systemic important' Permanent TSB
Rating agency Standard & Poor's (S&P) has cut its credit rating for Permanent TSB because it says the lender is of less systemic importance than previously estimated. S&P downgraded the state-owned lender from 'BB-' to 'B+'.
The move comes just a day after the bank announced plans to close at least 20 branches and lay off between 150 and 200 staff.
However, S&P said the downgrade had been in the pipeline since the agency started its review of Permanent TSB in April. The review was prompted by the Government's announcement of plans to create a viable retail bank by splitting Permanent TSB into "good" and "bad" elements.
"Following our review, we have revised our assessment of PTSB's systemic importance to 'moderate' from 'high'. We have left our assessment of PTSB's stand-alone credit profile (SACP) unchanged at 'B'."
S&P said that despite the downgrade, it thinks the Government will continue to support the loss-making bank, and that it will have a role in the future of the Irish banking system.
However, it said the negative outlook on the bank's long-term reflects challenges including the need to de-leverage, by selling off some assets, and of returning the business to profitability.
On Wednesday, the chief executive of Permanent TSB Jeremy Masding told the Oireachtas Finance Committee that the bank would unveil details of a restructuring plan next week. That plan was sent to European authorities at the end of June.
He warned customers that it plans to cut the rates it pays for deposits and may raise the interest it charges mortgage holders if the bank's own costs rise.