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Thursday 18 January 2018

Permanent TSB to lay off 250 staff and shut 19 branches

Permanent TSB is laying off 250 staff, but hopes to be back lending to home buyers from next year.
Permanent TSB is laying off 250 staff, but hopes to be back lending to home buyers from next year.

Charlie Weston Personal Finance Editor

MORTGAGE lender Permanent TSB is laying off 250 staff, but hopes to be back lending to home buyers from next year.

The State-owned bank confirmed yesterday that it is shutting branches and boosting its efforts to collect loan arrears.

The restructuring moves were part of a plan to get back to a situation of making a profit again by 2016.

Its plan to get back to a normal level of mortgage lending involves creating a new "bad bank" unit to take over €12.5bn of loss-making tracker mortgages and other loans that are not profitable, with this unit eventually to be sold or moved to another bank.

Permanent TSB, which currently operates 92 branches, said that it was closing 16 of them, with another two to become self-service locations.

The bank plans to close one of its Dublin city centre outlets, but will invest in a nearby branch to create a flagship site in the capital. This effectively means 19 branches will go.

The latest plan to lay off 250 staff takes to 782 the total number of Permanent TSB bankers made redundant in the past two years.

In 2010, 187 people lost their jobs, followed by 345 last year. It now has about 1,800 staff.

Redundancy deals are also getting less attractive. When it first started laying off people it was offering seven-and-a-quarter weeks' pay for each year of service plus statutory entitlements of two weeks' pay.

But the latest voluntary redundancy offer is three weeks' pay, plus statutory, with the payoff capped at €225,000.

The group also announced plans to reorganise its head office and said it wants to reduce operating costs by 10pc.

It will reconfigure itself into three three business units: Permanent TSB, an asset management unit and its UK mortgage loan business, CHL.

It is adding about 100 people to its mortgage collections division.

The bank said it intended to implement its restructuring programme "as a matter of urgency".

The State took control of Permanent TSB last year when it pumped €2.7bn into it. Another bailout of €1.3bn went into the bank, and its insurance division Irish Life, earlier this year.

Chief executive Jeremy Masding said that the overriding objective of the plan was to secure a viable future for a core banking business while minimising losses from the bank's challenged loan book.

Trackers

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.

An Oireachtas committee was told last week that 22pc of residential customers were in some form of arrears, with 14pc behind by three months or more.

A third of buy-to-let investors were in arrears, with 25pc behind by 90 days or more.

The bank has been reducing its variable rate interest rates, which were set so high they were blamed for pushing homeowners into arrears.

"Our objective is to carve out a viable, efficient, competitive and customer-focused Permanent TSB bank from within the current group," Mr Masding said.

"We believe that such a bank can make a positive contribution to the Irish banking landscape and is the best way of protecting the taxpayer's investment in our business," he said.

Irish Independent

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