PTSB appoints Deutsche Bank as adviser on return to private hands

Irish state-owned mortgage lender Permanent TSB (PTSB) has appointed Deutsche Bank to advise it on its future return to private ownership, the bank said yesterday.

PTSB, the smallest and weakest of Ireland’s three remaining domestically- owned lenders, cut its first-half underlying loss by 62% in August after impairment charges on its loans fell by two-thirds.

It was reported yesterday that Deutsche Bank had met potential investors who could take a stake in the 99% state-owned lender or buy it outright.

The bank received a €2.7bn bailout during the financial crisis, a sum chief executive Jeremy Masding said it would be unlikely be able to repay in full. However, the amount it could potentially pay back was increasing all the time, he said. PTSB is still awaiting approval from European authorities to split itself up to move problem loans off its balance sheet, and analysts say it remains vulnerable ahead of European-wide stress tests this month.

“While we expect the ECB’s comprehensive assessment to drive a period of M&A [mergers and acquisitions] and consolidation across the European banking sector, PTSB’s structural balance sheet issues are likely to pose the most significant obstacle to any investment,” said Ciaran Callaghan, an analyst at Merrion Stockbrokers.

“However, encouraged by peer write-backs (on provisions set aside to cover bad loans) evident over recent months, we think that private equity or trade buyers may now be attracted to the prospect of PTSB recoveries in the coming year.”

The State also holds a 99% stake in Allied Irish Banks, and 15% in Bank of Ireland.

— Reuters