Irish State may retain 75% stake in re-listed Permanent TSB

The Government is expected to only dispose of 20%-25% of its stake in Permanent TSB, rather than the 40% originally envisaged.

PTSB yesterday confirmed that it will use a public share offering — the first launched by an Irish bank since the financial crisis — to raise the bulk of the €525m it is looking for in order to pay back government loans and shore up capital shortfalls identified in last year’s ECB stress tests.

In a detailed update on its capital raising plans, the banking group said yesterday that a return to the main list of the Irish Stock Exchange and a secondary listing on the London Stock Exchange are planned following an initial offering. This would coincide with a delisting from Dublin’s secondary ESM market, where the 0.8% of its shares currently in free-float are listed. The group said it may ask the Government to sell a portion of its holding in order for it to meet flotation guidelines.

Part of this would be for it to have a minimum level of 25% of its shares in free-float. Early interest in the share offering suggests that the Government may only have to sell around 25% of its current 99.2% stake to allow the banking group to meet those guidelines. That would leave the State with a stake of just over 74%.

PTSB said it intends to raise gross proceeds of €400m (the amount earmarked for Government repayment) via a placing of new ordinary shares to institutional investors; and another €125m via a bond sale, or the offering of additional tier-1 capital instruments.

An open offer for existing qualifying shareholders will also occur, where investors can subscribe for additional shares at the same price being offered in the placement to institutional investors. The company is expected to complete the placing and the bond issuance over the next four weeks, after which the open offer will be launched. The latter element is set to complete by the end of next month. The Government will not be participating in the open offer.

Speaking yesterday, PTSB’s chief executive Jeremy Masding said that raising the €525m is the first stage in returning PTSB to private ownership and marks “another important step” in the journey of the business. He added that management has been “greatly encouraged” by the “significant” level of interest shown by investors.

“We are excited by the opportunity that PTSB has to be a successful and competitive force in the Irish banking sector, which we believe offers profitable growth opportunities,” Mr Masding said.

“We have made significant progress in transforming the bank, which, following completion of our non-core deleveraging, will have an exclusive focus on Irish retail opportunities where we believe that we have the brand and scale to achieve our medium-term targets.”

In a separate trading update, also published yesterday, PTSB said trading continued to improve in the first quarter of the year at its core bank, with progress made on mortgage arrears reduction.