Dissident IL&P shareholder moves to overturn €2.7bn recapitalisation

The Government’s belief that it has drawn a line under its banking crisis will be tested this week when a dissident Irish Life and Permanent shareholder attempts to overturn the bancassurer’s recapitalisation and effective nationalisation.

The Government used sweeping new bank laws to inject €2.7 billion into IL&P in July after shareholders originally voted down its plans to take a 99% plus stake and help fill a €4bn capital requirement that emerged in the aftermath of the EU/IMF bailout.

Piotr Skoczylas, a fund manager who led the shareholder revolt, takes his battle with the State to the courts today in a move he says could have repercussions for the Government’s much-lauded €63bn sector-wide recapitalisation.

“I feel and truly believe that the Government stole my money and I have pretty much spent the last year trying to defend and protect my property rights,” Mr Skoczylas, managing director of Malta-based, IL&P shareholder Scotchstone Capital, told Reuters.

“It is probably an understatement to say that I am determined.”

Mr Skoczylas, a former investment banker at Morgan Stanley, has become a thorn in the Government’s side over its plans to split IL&P’s struggling banking arm, Permanent TSB, from its life insurance arm, the proposed sale of which had to be shelved late last year after market turmoil put off prospective buyers.

While acknowledging Permanent TSB’s high proportion of loss-making tracker residential mortgages as a problem, the Polish-born banker opposes the split and sale of the cash-rich insurance business, instead proposing the bancassurer be given a time to find private equity investment.

The future of Permanent TSB is currently being debated by the Government and its EU/IMF lenders and the Government sees its resolution as the final piece of its banking plan.

Mr Skoczylas says an investment of €1bn would provide the group with a sufficient buffer, a figure strikingly short of the €3.3bn shortfall the Central Bank said would arise from future losses and the cost of deleveraging almost half of the bank’s €37bn loan book.

“I’m not trying to paint a rosy picture that there is nothing to worry about, there is a lot to worry about,” said Skoczylas, who was also elected director to the board of IL&P in July.