PTSB share sale bids to raise €400m

Permanent TSB Group Holdings Plc may raise as much as €400m in a share sale, according to a person with knowledge of the matter, more than double the amount signalled by the lender last month.

Chief executive Jeremy Masding told politicians in Dublin last month that the lender aimed to raise €100m to €150m to shore up its capital, and that it had drawn “real interest” from potential investors in the UK and US Permanent TSB was the only Irish bank to fail the European Central Bank’s stress test in October.

Raising more equity would improve the quality and level of the bank’s reserves beyond what regulators are demanding, said a person who asked not to be identified, as the matter is private. The company’s shares dropped 10% in Dublin trading yesterday.

Officials from Permanent TSB, Ireland’s Finance Ministry and Central Bank declined to comment.

Permanent TSB hired Deutsche Bank and securities firm Davy in October to assess market demand for a share sale.

The lender has said it has already covered more than 80% of an €855m capital hole found in the tests with €400m of state-owned contingent convertible bonds and by shrinking its balance sheet this year.

ECB supervisors last week endorsed the capital-raising plans of the 13 euro-area banks, including Permanent TSB, that failed the stress tests and still had gaps after measures taken this year were accounted for.

The lenders have as long as nine months to implement the capital plans.

Separately, the High Court rejected a case by a group of minority Permanent TSB shareholders seeking to prevent the Government selling shares in the lender.

The group, led by investor Piotr Skoczylas, wanted an injunction pending a Court of Justice of the European Union ruling on the Government’s move in 2011 to inject €2.7bn into the company and seize control of it.

Permanent TSB “is clearly not out of the woods yet and, as a regulatory matter, requires further recapitalisation,” Judge Iseult O’Malley said in court in Dublin yesterday.

Preventing it from raising money “carries obvious risks to the commercial wellbeing of the company and, potentially, to the state.”

* Bloomberg