PTSB wants to take on Ulster Bank branches as talks go on over carve-up of loan books   

Permanent TSB chief executive Eamonn Crowley said Ulster Bank "has a look and feel of a Permanent TSB already". Photo: Colm Mahady / Fennells

The chief executive of Permanent TSB (PTSB) said he was "quite positive" the Government-owned mortgage bank will strike some sort of deal in the carve-up of the €20bn of Ulster Bank loan books. 

Eamonn Crowley said he was upbeat about the progress of the talks with Ulster Bank and its parent NatWest as it exits the Republic but insisted he had no targets at this stage on the amount of mortgage and small business loans Permanent TSB was hoping to acquire in the sale. 

However, Mr Crowley said Permanent TSB was interested in taking on Ulster Bank branches, if the talks were successful, but he did not specify whether his mortgage bank was interested in taking on all or some of the 88 branches the bank has in the Republic.    

Mr Crowley — who had set out his ambitions to grow the bank when took over as CEO last year — said the size of the Ulster Bank loan book and branch network were similar to those of his own bank. 

Ulster Bank "has a look and feel of a Permanent TSB already", he told reporters, and Permanent TSB was investing in and had no plans to close its own 76 branches, he said, but again cautioned that there was no guarantee that the talks would be successful.    

He also talked about the "complexity" involved in looking at Ulster Bank, a lender which has around a million customers.        

The decision taken last month by Ulster to exit the Republic has thrown banking into crisis and threatens to strengthen further the grip the big two, AIB and Bank of Ireland, already have over the market. 

The crisis only deepened after Bank of Ireland last week said it plans to start closing 103 branches, north and south, later this year.       

The Government has since marshalled the 75%-owned Permanent TSB as well as fellow State-owned AIB to buy large parts of the Ulster Bank loans.

Banking experts say the State may likely support Permanent TSB in helping it acquire parts of Ulster, possibly along with outside investors, by injecting more money into the lender. 

As all Irish banks, Permanent TSB was hit hard by the pandemic but it was already among the weakest in terms of financial health. 

It comes as Permanent TSB revealed the fallout of the Covid-19 economic storm.

It posted an underlying loss of €109m for 2020 compared with a profit of €74m in 2019 and disclosed an after-tax loss of €162m which compares with a net profit of €30m in the previous year, as it accounted for a €155m charge in loan impairments. The bank had returned to profit in the second half of 2020, it said.

Non-performing loans increased by €88m to €1.1bn, or 7.6% of relevant exposures, a level Mr Crowley said was "manageable". Its net interest margin — a key measure of the profitability for lenders — fell to only 1.73% in 2020.

It has a book of around €15.8bn in home loans but has, for some time, wanted to expand into lending to small firms, or SMEs. It said it kept all of the 76 branches open during the pandemic. 

Asked about the high cost of loans all banks charge their customers in the Republic, Mr Crowley cited the relatively large capital reserves Irish banks have to hold as a factor. 

Shares in Permanent TSB eased slightly to value the lender at €502.5m.