IL&P keeps eye on other bank moves

IRISH Life & Permanent has definite plans to develop the banking arm of its business, but will wait until the restructuring of the other banks have been put in place before any moves are made.

Speaking after the group’s AGM in Dublin, chief executive Kevin Murphy said the group sees potential link-ups down the line as part of the consolidation of the Irish banking sector.

Bank of Ireland is to sell its ICS Building Society unit and that could be a potential fit with the bank, he said yesterday.

“We feel the most likely set of developments is some restructuring with some of the smaller banks in Ireland. If that happens our shareholding will change but we will still be a significant shareholder,” he said.

Given the options opening up a link up with EBS and Irish Nationwide still looks like he most likely outcome at this stage, he said.

Irish Life which is not involved in NAMA and which survived the banking crash without needing a capital injection from the state said it will need to raise €700m to fund any future restructuring. It has engaged with the banks about their respective development plans, but said it will wait for the restructuring issues to be resolved before making any moves. Overall it plans to raise about €900 million before the end of the year to fund its development.

In March the company has said that the bank could be a player in a “third force” in Irish banking by merging it with EBS and Irish Nationwide, which were then in merger talks. It said also that the British-owned Ulster Bank and the nationalised Anglo Irish Bank were also seen as possible partners for Permanent TSB in any consolidation across the banking sector.

IL&P posted a pretax loss of €319m for 2009 as increased bad debts and higher funding costs left Permanent TSB with an operating loss of €270m.

Group chairman Gillian Bowler faced further pressure to resign her position yesterday and was asked to justify how its two former top executives, chief executive Denis Case and Peter Fitzgerald, chief financial officer, were paid a combined €5.2m in severance packages last year.

Mr Bowler said the deals reflected the contractual entitlements due to the former senior executives and had to be honoured by the board.

One angry shareholder suggested the board should ask for the money back.

Due to legal considerations Mr Bowler said she could not comment further, given the current investigations going on into the unauthorised €7.5bn plus lent by the group to Anglo Irish Bank.

Ms Bowler said the Garda probe into that issue “is very active and the group is co-operating as much as possible”. While Permanent TSB took the unpopular decision to raise interest rates earlier this year, the bank was dealing humanely with its 8,000 mortgage customers in arrears.

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