Deutsche Bank drives hard bargain as TSB set to sell car leasing business

Permanent TSB is on schedule to sell its car-leasing business by the end of November. The division will be sold at a discount, with the price in the range of a “few hundred million” euro, according to a source close to the company.

The buyer is believed to be Deutsche Bank.

Permanent TSB and Deutsche Bank both declined to comment.

However, negotiations are at an advanced stage.

The new chief executive of Permanent TSB, Jeremy Masding, is divesting the bank of all non-core divisions as part of a restructuring of the beleaguered group.

The company is close to finalising three senior executive appointments. All three are awaiting regulatory approval. It is believed that the interim chief financial officer, Glen Lucken, will be appointed on a permanent basis.

Mr Masding, who took over the bank at the beginning of the year, has overseen a restructuring of its operations. The bank has been separated into three units: Permanent TSB, which will carry out its lending business in the future; an asset management unit, which will wind down the economically non-viable part of its loan book; and a division to run its UK mortgage book.

There has also been a redundancy programme, branch closures and a reduction of the cost base.

Mr Masding says he hopes to have Permanent TSB profitable by the end of 2015 but, firstly, its long-term mortgage arrears problem must be dealt with.

Permanent TSB and Irish Life were separated in March of this year. The Government is in talks with a number of advisors on the sale of Irish Life. Goldman Sachs is the lead adviser on the transaction. It is expected that Deutsche Bank will be appointed lead adviser by Irish Life when the sale process officially begins.

One advisory firm has recommended an initial public offering at the end of 2013, but an informed source says the Government will almost certainly pursue a trade sale.

A deal with the Canadian Great-West LifeCo collapsed at the last minute last November amid concerns about the eurozone crisis. The Government paid €1.3bn to take Irish Life into the State fold.