IL&P required to raise €145m

IRISH Life & Permanent has to raise €145 million under new funding guidelines, by May 31, 2011.

This follows a review by the Central Bank and Financial Regulator, which confirmed that the bank/assurance group has no need to boost its Core Tier 1 Ratio which already stands at the required 8%.

Irish Life & Permanent chief executive, Kevin Murphy, last night & welcomed the decision, the result of the Prudential Capital Assessment Review of its banking subsidiary, Permanent TSB.

Mr Murphy said that the conclusion of the exercise “confirms the robust capital strength of the group which has avoided any call on the Government for capital and which has no exposure to NAMA.”

The review found the bank has sufficient capital to meet its base case scenario for the next 3 years 2009–2012, but requires €145m in additional capital to meet its stress case scenario for the period.

The company said it will meet its requirements through its own resources by way of a planned VIF Securitisation as well as cash flow from other non-banking subsidiaries.

IL&P said, however, if the bank and the life company are separated in the event of a takeover by it of the EBS building society, then it would require €925m to recapitalise Permanent TSB on a stand alone basis.

At the end of August when it published interim results, Il&P said it expected debt markets would have recovered sufficiently to facilitate the raising of €1.3 billion to €2.8bn of term debt by year-end.

First half 2010 figures showed the group made losses of €10m, significantly better than forecasts for loses of €90m-plus.

Last May, the company said the likely recapitalisation of the bank following a de-merger was estimated at €900m. The confirmed figure of €925m will assure the markets that there is no black hole to be filled in the context of an EBS takeover.

Despite that, shares in the group fell 1.84% to €1.60, a fall of 3 cents.

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